Stocks Flat Amid Conflicting Data, Geopolitical Worries

The Dow posted modest gains but the Nasdaq ended flat in very choppy trading Friday as geopolitical uncertainties, conflicting economic data and the threat of war left investors with little faith in the market.

The Dow Jones industrial average gained 37.96 points, or 0.49 percent, to 7,859.71. The broader Standard and Poor's 500 , rose a scant 1.36 points, or 0.16 percent, to 833.26, and the technology-laced Nasdaq Composite Index slipped 0.51 point, or 0.04 percent, to 1,340.26.

For the week, the Dow rose 1.6 percent, the Nasdaq gained 2.7 percent and the S&P 500 was up 0.5 percent.

"I think people are just back to reality," said James Volk, director of institutional trading at D.A. Davidson & Co. "Even if there is a quick resolution to a war, or a peaceful resolution, then I think people are going to start looking at the economy again, and things are not good."

An emergency weekend summit of the leaders of the United States, Britain and Spain called over the Iraqi crisis kept many investors from making big bets a day after the market posted its biggest one-day gains in five months.

A survey revealing bleak U.S. consumer confidence and a report showing the manufacturing sector is struggling to find its footing helped remind investors that the economy is still muddling along, at best.

An upbeat brokerage call helped lift defense-related stocks like Lockheed Martin Corp. (LMT), but that was countered by weakness in auto shares after Ford Motor Corp. (F) slashed its production forecast.

The market managed this week to hold its ground above the multiyear lows hit in October, but there is still little reason for investors to celebrate, said Charles White, president of investment firm Avatar Associates.

"With some important meetings that will take place this weekend, it's hard to get a catalyst for a major upside move in the market," White added.

The emergency summit on Sunday was a last-gasp diplomatic effort to overcome opposition in the U.N. Security Council to a resolution paving the way for war on Iraq.

President George W. Bush will travel to Portugal's Azores Islands to meet British Prime Minister Tony Blair and Spanish Prime Minister Jose Maria Aznar, the White House said on Friday.

Bush also said the United States would unveil a long-delayed Middle East peace plan which envisions a Palestinian state once the Palestinians confirm a new prime minister with "real authority" to act.

Shares of major automakers and suppliers were battered after Ford set a sharply lower car and truck production forecast for the second quarter due to the weak U.S. economy and war fears.

Ford shares fell 37 cents, or 5 percent, to $6.76, General Motors Corp. (GM) shares dropped 60 cents to $32 and DaimlerChrysler AG fell 99 cents to $27.51.

The drug sector was in focus after Irish drugmaker Elan Corp. (ELN) said U.S. regulators were investigating whether it unfairly blocked generic competition for the muscle relaxant Skelaxin, endangering the proposed sale of U.S. rights to the drug to King Pharmaceuticals Inc. .

Elan's U.S.-traded shares tumbled 33 percent, or $1.22, to $2.52, and King, which disclosed on Tuesday that the U.S. Securities and Exchange Commission was investigating its pricing and rebate practices on certain drugs, slumped 88 cents, or 7 percent, to $11.11.

Agrochemical company Monsanto Co. (MON) also came under fire after it said the U.S. Department of Justice was investigating possible antitrust violations in the herbicide market, in which Monsanto is a leading player. Its shares fell $2.51, or 15 percent, to $14.07.

Among the market's bright spots were defense shares after investment bank Salomon Smith Barney raised its recommendation on the group, saying it expects earnings growth in the industry to outpace the overall market. Defense contractors Northrop Grumman Corp. (NOC), up $3.34 at $84.40, and Lockheed Martin Corp., up $1.98 at $45.19, were named as top picks,

Andrew Corp. (ANDW) cut its quarterly outlook, saying customer spending has declined more than expected. That sent the communications gear maker's stock down 25 percent, or $1.98, to $5.84.

Online brokerage Ameritrade Holding Corp. (AMTD) warned of weaker-than-expected earnings and said customer trading activity fell 25 percent in February from the prior month. Its shares tumbled 9 percent, or 39 cents, to $3.96.

In economic news, a reading of U.S. consumer confidence in March was at its lowest level in more than a decade. The University of Michigan's preliminary March index of consumer sentiment fell for a third straight month to 75.0, its lowest since October 1992, from 79.9 in February, market sources told Reuters on Friday. Economists had forecast a slide to 77.6.

But traders generally shrugged off the drop.

"So people are not confident? Who didn't know that, right?" said Andrew Baker, senior Nasdaq trader. regional investment bank Wedbush Morgan in Los Angeles. "Consumer spending has been weak and everything is on hold until we get the war situation resolved."

In other economic data, a slight rise in U.S. industrial production and a fall in core producer prices provided some comforting economic news but another report on inventories showed concerns about the economy.

Industrial output rose slightly in February, the Federal Reserve said, as increases in mining and utilities output offset slower factory assembly lines. The Fed said production gained 0.1 percent, compared to the 0.1 percent decrease that Wall Street analysts had forecast. Capacity in use by companies remained unchanged at 75.6 percent in February.

Prices paid to U.S. producers climbed more than expected in February, pushed up by soaring fuel costs, the government said in a report showing little sign of inflation outside the energy sector. Overall producer prices climbed 1 percent, the Labor Department said, higher than analyst forecasts for a 0.7 percent rise. The number followed a 1.6 percent increase the previous month.

Trading was active, with about 1.5 billion shares traded on the Big Board and about 1.6 billion shares traded on Nasdaq.

The Russell 2000 index, the barometer smaller company stocks, fell 1.05, or 0.3 percent, to 354.39.

Overseas, Japan's Nikkei stock average finished Friday up 1.7 percent. In Europe, France's CAC-40 surged 7.3 percent, Britain's FTSE 100 rose 3.3 percent and Germany's DAX index gained 2.1 percent.

Reuters and the Associated Press contributed to this report.