Stocks continue winning streak

"Investors are definitely trying to figure out how all this news is coming out," said Peter Dunay, chief market strategist at Wall Street Access, a New York-based brokerage firm. "We had such a big run-up that people were scared we got ahead of ourselves."

The New York Stock Exchange and Nasdaq Stock Market observed two minutes of silence to honor U.S. troops fighting abroad.

U.S. forces launched their long-awaited war against Saddam Hussein late Wednesday, with a targeted strike aimed at Iraq's leadership in Baghdad. President Bush said in a national address the barrage marked the start of a "broad and concerted" operation to disarm Iraq and that the conflict "could be longer and more difficult than some predict."

The news weighed on investors, who are expected to trade in the next days on minute-by-minute developments overseas. Stocks have surged in the past week on anticipation of a quick war, but could see declines should the conflict show signs of becoming prolonged.

Indeed, the Dow recovered Thursday after the United States launched its ground attack and after reports Saddam may have been wounded in Wednesday's strike.

"The market will gyrate to the latest events -- good or bad. I think it will be amazing how the market dovetails to the news coming out of Iraq," said Stephen Massocca, president of Pacific Growth Equities. "A quick victory is good. Anything that bogs it down would be bad."

A pair of mixed reports on jobless claims and economic activity, meanwhile, had little discernible effect on investors. The Labor Department reported new claims for unemployment insurance dipped by a seasonally adjusted 4,000 to 421,000 for the week ending March 15. Still, the level was higher than analysts' forecasts.

And the Conference Board reported that its Index of Leading Economic Indicators dropped 0.4 percent in February from a month earlier to 111.1. The decline was in line with expectations.

Viacom increased $1.94 to $40.84 after the media company announced a new contract with president and chief operating officer Mel Karmazin that will keep him for three more years.

Nike rose $2.77 to $52.85 after the athletic shoe company said sales improved and earnings remained flat, which was in line with analysts' expectations.

McCormick climbed 46 cents to $25.58. The spicemaker will replace HealthSouth on the S&P 500 at the close of trading Thursday.

But AMR, parent of American Airlines, fell on worries that a war will dampen travel. It dropped 9 cents to $1.75.<