Anxieties over Iraq and interest rates have kept many investors on the sidelines for the past few weeks, and the latest data did little to lure buyers. Analysts say that until the end of the month, when the Federal Reserve takes action on rates and sovereignty is transferred in Iraq, there will be little to drive the market forward.

"The market's in a malaise," said Larry Wachtel, a market analyst with Wachovia Securities. "Once we get past the Fed meeting and the transfer of power in Iraq, and we get to second-quarter earnings, at least I'll have something to hang my hat on. But until then, there's nothing to spur me into action."

According to preliminary figures, the Dow Jones industrial average closed down 2.06, or 0.02 percent, at 10,377.52.

The broader gauges also finished lower. The Nasdaq composite index slumped 14.56, or 0.7 percent, to 1,983.67; the Standard & Poor's 500 index shed 1.53, or 0.1 percent, to 1,132.03.

The Labor Department issued two reports today. The good news was that fewer people signed up for jobless benefits last week. The bad news was that wholesale prices rose in May at the fastest pace in 14 months.

The 0.8 percent rise in the Producer Price Index — which measures prices of goods before they reach store shelves — was largely due to rising costs of energy and food. Excluding those factors, "core" wholesale prices rose by a more modest 0.3 percent in May, higher than the 0.2 percent economists were expecting. Investors saw the inflationary reading as something that might change the Fed's approach to rates.

"The strong reaction to this small difference between actual core PPI and what was expected shows how skittish people are about inflation right now," said Ken Tower, chief market strategist for Schwab's CyberTrader.

The market expects a 0.25 percent rate hike when the central bank meets June 29-30, but more bearish investors fear it could be as high as 0.50 percent.

The market is also uneasy about the June 30 handover of political power in Iraq. Sabotage that halted the nation's oil production yesterday and a pair of car bomb attacks today raised further doubts about the likelihood of smooth transition.

Among the day's advancers, motor home manufacturer Winnebago Industries Inc. added $4.85, or 15 percent, to $36.85, after reporting earnings that surged past Wall Street forecasts.