US stocks bounced between gains and losses as the prospect of a war with Iraq overshadowed optimism that earnings growth and the economy are recovering.
General Motors Corp and Ford Motor Co fell on concern that auto sales will slow as consumers cut spending, while defense stocks climbed as a Salomon Smith Barney analyst said profit in the industry will outpace others.
The Standard & Poor's 500 Index erased an advance of as much as 1.1 percent Friday after surging to its biggest gain in five months on Thursday. Investors said a meeting Sunday between US President George W. Bush and two allies may hasten a war.
"You're talking about a potentially very newsworthy weekend," said Tim Anderson, senior trader at Salomon Smith Barney Inc. "People are not going to want to go into the weekend with big bets."
The S&P 500 was little changed, down 0.67 to 831.23 in New York. The Dow Jones Industrial Average rose 28.08, or 0.4 percent, to 7,849.83 and the NASDAQ Composite Index declined 2.83, or 0.2 percent, to 1,337.94.
US indexes are headed for their first weekly gain in three.
The S&P 500 has risen 0.5 percent, the Dow average has gained 1.6 percent and the NASDAQ Composite has risen 2.5 percent. For the year, both the S&P 500 and Dow have declined on concern a war will curb global economic growth.
About four stocks rose for every three that fell on the New York Stock Exchange. Some 999 million shares changed hands on the Big Board, 15 percent more than the same time last week.
General Motors fell US$0.79 to US$31.81. Ford Motor Co, its smaller rival, said it will cut North American vehicle production by 17 percent in the second quarter as the company faces slowing sales.
Ford lost US$0.39 to US$6.74. Analysts at Merrill Lynch & Co, Morgan Stanley and Bear Stearns Cos trimmed their earnings estimate following the automaker's production cut announcement.
Defense companies gained as Salomon Smith Barney Inc analyst George Shapiro boosted his rating on the stocks to "overweight" from "market weight."
He said the group's earnings growth of 15 percent will exceed the broader market's growth rate.
United Technologies Corp, whose unit makes the US Army's Black Hawk helicopter, gained US$1.29 to US$58.65, leading the gains in the Dow. Lockheed Martin Corp, the largest US defense contractor, rose US$1.99 to US$45.20. Northrop Grumman Corp, which makes fighter jets for the US air force, added US$2.86 to US$83.92.
El Paso Corp climbed US$0.72 to US$5.12. The largest owner of US natural-gas pipelines obtained a US$1.2 billion loan and completed a US$500 million asset sale to retire other debt and pay off bonds that come due Monday.
Drug and healthcare shares sank, contributing the most to the S&P 500's decline.
Baxter International Inc extended its decline. The stock lost US$2 to US$19.60, bringing its five-day slump to 32 percent. The world's biggest maker of treatments for blood diseases said first-quarter earnings will drop.
The US shares of Ireland's Elan Corp plunged US$1.22 to US$2.52 after King Pharmaceuticals Inc said a US antitrust investigation raises "serious concerns" about Elan's proposed US$850 million sale of a business to King. The Irish company, which may have to pay off US$800 million in debt this year, plans US$1.3 billion of divestments. King shed US$0.86 to US$11.13.
Andrew Corp slumped US$1.82 to US$6. Its 23 percent drop was the biggest in the S&P 500. The maker of wireless-network components said its second-quarter loss will be wider than forecast because customers are cutting spending on new equipment.
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