NEW YORK – Stocks closed a stellar month on a lackluster note Friday, slipping amid fears about a possible bankruptcy at UAL Corp. (UAL)'s United Airlines, the second-largest U.S. airline.
The Dow Jones industrial average closed down 35.59 points, or 0.40 percent, at 8,896.09, according to the latest figures. The broader Standard & Poor's 500 Index was down 2.56 points, or 0.27 percent, at 936.31. The technology-laced Nasdaq Composite Index was down 9.11 points, or 0.61 percent, at 1,478.83.
Despite the declines, major market gauges gained for the week and have climbed for two straight months as confidence grows that a strengthening U.S. economy will help boost corporate profits.
The Dow wrapped up its eighth straight week of gains -- its longest winning streak since March 1998. For the S&P 500 and the Nasdaq composite, it was the longest monthly winning streak since a three-month rally ended in December of last year.
For the month, the S&P 500 climbed 5.6 percent, the Dow rallied 5.9 percent, and the Nasdaq surged 11.2 percent.
"The past two months have been very strong, and people feel a sense of relief that there is at least an appearance of things improving," said Michael James, senior equity trader at regional investment bank Wedbush Morgan. "The majority of people feel better. You had a pretty strong rally from the beginning of October to the end of November."
Volume was light during the abbreviated trading session. The stock market closed at 1 p.m. EST after being closed on Thursday for the holiday. The day after Thanksgiving usually marks one of the slowest trading days of the year, and Friday was no exception, with only 637 million shares changing hands on the New York Stock Exchange.
About 833 million shares traded on the Nasdaq.
Breadth was neutral, with the same number of stocks advancing for the number that declined.
Optimism over the economy and stocks has grown, but worries remain over the threat of war with Iraq and the possibility of more attacks on the United States. Thursday brought a deadly suicide bombing at an Israeli-owned hotel and an attempt to shoot down an airliner full of Israeli tourists, both in Kenya.
Some traders said stocks are likely to pull back in coming days.
"The market is getting a little bit ahead of itself, and people are getting a little bit leery of buying stocks." said Dan McMahon, head of listed trading at CIBC World Markets. "You will see more people taking profits at these levels in the short term. The economy seems like it has bottomed and the soft patch is behind us, but there doesn't seem to be any real expansion."
UAL Corp. (UAL), parent of United Airlines, ranked as the third most-active stock on the New York Stock Exchange, losing a third of their value, after analysts said the airline might seek bankruptcy protection following its mechanics' rejection of $700 million in pay cuts.
United, bleeding about $8 million of cash a day and saddled with high operating costs, faces a Monday deadline to make a $375 million payment on debt backed by aircraft.
UAL shares fell $1.12, or almost 31 percent, to $2.51. It was the biggest percentage loser on the NYSE.
EP MedSystems Inc. (EPMD) emerged as a big winner, more than doubling its value, to $4.92 and ranked as the largest percentage gainer on the Nasdaq. The medical device maker said it received U.S. regulatory approval to market its Alert catheter system used for treating atrial fibrillation, a leading cause of strokes.
Sealed Air Corp. (SEE), the maker of Bubble Wrap, soared $13.33, or 54.5 percent, to $37.81 after the company said it agreed to resolve all pending and future asbestos-related claims against it for less than some investors had feared.
The agreement boosted hopes that other companies were close to resolving their asbestos woes. Honeywell International Inc. (HON), a maker of airplane brakes, wheels and electronics, rose $1.43 to $25.87 and oilfield services and construction company Halliburton Co. (HAL) rallied $1.81 to $21. Paper products company Georgia Pacific Corp. (GP) jumped $3.16 to $20.73.
Toy retailer FAO Inc. (FAOO) tumbled 45 cents, or 16 percent, to $2.30 after the company warned that it would not meet its earnings target this year due to weak sales.
FAO, which operates upscale children's toy stores FAO Schwarz and the Zany Brainy and Right Start chains, said that restrained consumer spending and the weak economy will force it to cut its fiscal 2002 outlook when it releases its third-quarter results next month.
The Russell 2000 index, which tracks smaller company stocks, fell 3.88, or 1 percent, to 406.36.
Overseas, Japan's Nikkei stock average finished Friday 0.4 percent higher. In Europe, Germany's DAX index was down 0.7 percent, France's CAC-40 declined 0.1 percent, and Britain's FTSE 100 declined 0.4 percent.
Reuters and the Associated Press contributed to this report.