The rare opportunity to lock in gains in a disappointing January was too tempting for many investors to ignore. A mix of economic data — lower-than-expected unemployment and a somewhat disappointing report on factory orders — did not provide a boost to keep the markets in positive territory for a third straight session.

Investors were also concerned about oil prices, which once again pushed toward $50 per barrel ahead of this weekend's OPEC meeting. A barrel of light crude was quoted at $48.84, up 6 cents, on the New York Mercantile Exchange.

"The past couple of days have seen some improvement, but it's been very tepid, almost a stealth rally," said Ken Tower, chief market strategist for Schwab's CyberTrader. "With the downtrend we've been in this month, I don't think anybody's feeling any urgency to put money to work here."

The Dow Jones industrial average fell 31.19, or 0.3 percent, to 10,467.40.

Broader stock indicators rose modestly. The Standard & Poor's 500 index was up 0.48, or 0.04 percent, at 1,174.55, and the Nasdaq composite index gained 1.06, or 0.05 percent, to 2,047.15.

Despite strong earnings, the markets have struggled to post gains so far this month — all three major indexes have risen in only seven of January's 18 sessions. Concerns about the economy, the Federal Reserve's stance on interest rates and rising oil prices have all weighed heavily on the markets.

"The sentiment indicators were very strong in November and December, and people I think were just too optimistic," said Richard Driehaus, chairman and chief executive of Driehaus Capital Management Inc. "This is a very tenuous market, and you don't want to be too bold here."

The Labor Department said first-time jobless claims rose by 7,000 to 325,000 last week, less than the 333,000 economists expected. That bolstered Wall Street's hopes that next week's monthly job creation report would show decent job growth.

Orders for durable goods — products designed to last at least three years — rose 0.6 percent in December, a decline from the 1.8 percent gain in the previous month and less than the 0.9 percent Wall Street had expected. Sharp drops in aircraft and defense orders kept the gains minimal.

The market was also nervous in advance of Sunday's elections in Iraq, and the possibility that increased violence could either disrupt oil supply or extend the time that U.S. troops will be in the country.

AT&T jumped $1.15 to $19.60 on media reports that the company could be acquired by former Baby Bell SBC Communications Inc. in a deal valued at at least $15 billion. SBC lost 91 cents to $23.67 on the news.

Dow component Verizon Communciations Inc. swung to a profit in the fourth quarter after a loss a year ago, posting a 6 percent gain in revenues and matching Wall Street's profit expectations. Verizon nonetheless shed 65 cents to $35.87.

Nokia Corp. was up 89 cents at $15.22 despite seeing its quarterly profits fall 13 percent. The cellular phone maker said revenues rose 3 percent and that the company had regained market share. Nokia surpassed analysts' forecasts by 7 cents per share.

Caterpillar Inc., another Dow component, missed Wall Street's forecasts by 8 cents per share in the current quarter, even as profits climbed 58 percent from the year-ago quarter. Caterpillar tumbled $4.60 to $86.52.

Sears, Roebuck and Co. gained 18 cents to $50.08 after posting profits that beat expectations by 10 cents per share. The company said lower costs helped overcome weak holiday sales. Kmart Holding Corp., the company's proposed merger partner, climbed $4.02 to $93.45 on the news.

Advancing issues outnumbered decliners by nearly 5 to 4 on the New York Stock Exchange, where preliminary consolidated volume came to 2.04 billion shares, compared to 2.06 billion yesterday.

The Russell 2000 index of smaller companies was up 0.33, or 0.05 percent, at 616.90.