Updated from 11:23 a.m. EST

Stocks were sliding on Wednesday, as war jitters returned ahead of the deadline for Saddam Hussein to leave Iraq.

After gaining nearly 40 points earlier, the

Dow Jones Industrial Average

was down 41 points, or 0.5%, at 8153. The


was down 21 points, or 1.5%, at 1379. The

S&P 500

was down 5 points, or 0.5%, at 862.

As the 8 p.m. EST deadline for Saddam Hussein to leave Iraq nears, the country has given stronger signs that it will disregard President Bush's ultimatum. Iraq's Parliament had an extraordinary session Wednesday to show support for its president, and promised not to surrender to U.S. forces.

After gaining 8% over the last four trading sessions, the major market averages were swinging, as profit-takers and bargain-hunters squared off.

"There's just no rhyme or reason out there. Stocks are moving up and down and all over the place. There's really no clear trend, other than people probably positioning their portfolios ahead of the war," said Todd Leone, a trader at SG Cowen. "This has been a tremendous war rally. I'm kind of surprised we were up at all today."

While the markets were starting to slide, Leone said the overall mood in New York was calm and hopeful, much different than a few weeks back when the first shift to Code Orange boosted duct-tape sales. "There was more tension then. People aren't that afraid. They believe this will be a relatively quick war. They saw what happened in 1991," said Leone. "We have 12 years to add new technology, whereas they have none. But what happens after?"

The pullback occurred against a backdrop of fairly dramatic corporate news.

In the biggest story of the day, Barry Diller's

USA Interactive

(USAI) - Get Report

agreed to buy out the public shareholders of


(EXPE) - Get Report

in a deal worth $3.3 billion. Diller also quit as the head of

Vivendi Universal's

(V) - Get Report

entertainment division, saying he'd never considered the position permanent.

Meanwhile, the


charged surgical rehabilitation provider


(HRC) - Get Report

with overstating its earnings by $1.4 billion over the last four years, saying Chief Executive Richard Scrushy directed the operation in order to meet analyst earnings estimates. Trading in the company's shares was suspended for two days as its financials are sorted out.

Bear Stearns

( BSC) announced first-quarter earnings of $2 a share, much better than Wall Street expectations of $1.35 a share. Revenue came in at $1.51 billion, $31 million better than the consensus and up 22.3% over the year-ago quarter. Shares rose 0.9% to $65.08. (For more on Bear Stearns, read

our separate story .)

Technology stocks got more good news on Tuesday after


(CSCO) - Get Report

said it was repurchasing shares, while a semiconductor industry forecast showed improvement and a heavyweight in the world of chips was upgraded. Cisco dipped 0.4% to $14.14 after the company's board of directors authorized an additional $5 billion for its stock buyback program As of Jan. 25, 2003, the company had repurchased and retired 317 million common shares for $4.4 billion since starting the program.

Meanwhile, the semiconductor-equipment book-to-bill ratio rose to 0.99 last month, reflecting a 5.8% jump in new orders to $781.7 million. The ratio, which shows that equipment makers received $99 in new orders for every $100 of goods sold, is at its highest level in six months, according to Semiconductor Equipment and Materials International, which compiles it.

Advanced Micro Devices

(AMD) - Get Report

was upgraded to neutral from underperform at CSFB on grounds that its flash memory business should be strong in 2003. CSFB views high-density flash memory, which is used in cell phones and other devices, as the best sector in the chip universe, near term. AMD, which is up 18.7% over the last week, rose 0.6% to $6.59.

On a down note,


(ORCL) - Get Report

reported higher-than-expected fiscal third-quarter earnings Tuesday night, but also said revenue from new software licenses fell, while its outlook remains uncertain in light of the war. The largest maker of business software said net profit grew 12% on a 2% revenue increase, but license revenues fell 1% to $742 million in the quarter. Oracle dropped 7.8% to $11.30. (For more on the fortunes of Oracle, see

a separate story. )

Microchip Technology

(MCHP) - Get Report

warned that its fourth-quarter revenue and earnings will be weaker than expected because of slow demand amid preparations for war. Shares fell 11.1% to $21.11.

Also on the tech front, Linux leader

Red Hat

( RHAT) and


(HPQ) - Get Report

announced a deal that would make H-P the preferred vendor for the complete Red Hat Enterprise Linux product line. Red Hat rose 0.7% to $5.98, while H-P rose 0.4% to $16.81.


(FDX) - Get Report

announced third-quarter earnings of 49 cents a share, including charges related to the nasty February weather, which would be a penny lower than Wall Street consensus, if the item isn't considered extraordinary from an accounting standpoint. Going forward, FedEx said fourth-quarter earnings would come in between 88 cents and 95 cents a share, which is near current consensus of 90 cents a share. FedEx gained 4.2% to $53.87. (For more on FedEx, including good news about a boost in shipping, check

our extended coverage .)


( BMET) announced third-quarter earnings of 28 cents a share, matching Wall Street expectations, on $354 million in revenue, up 16.2% year-over-year. After an internal audit of Biomet's European operations, the company said it would take a $4.2 million charge. Shares fell 5.2% to $30.62.

Westwood One

( WON), one of the nation's largest producers of radio content, warned that first-quarter revenue and cash flow would be down from last year's levels, while fiscal 2003 revenue would also slump below previously announced expectations. Shares fell 5% to $31.43.

Goodyear Tire

(GT) - Get Report

said it is shopping around its chemical business, which has annual revenue of $750 million but faces exposure to the rising cost of fuel. Shares in Goodyear gained 2.6% to $4.35.

On the retail front, discount chain

Family Dollar


dipped 0.9% to $29.49 after the company reported second-quarter earnings of 42 cents a share, matching consensus. Likewise, discount clothier

Ross Stores

(ROST) - Get Report

announced fourth-quarter earnings of 74 cents a share, matching consensus, but Ross shares dropped 2.6% to $36.40. (


has more on Family Dollar in

a separate story .)

Worthington Industries

(WOR) - Get Report

, one of the biggest steelmakers in the world, announced third-quarter earnings of 13 cents a share, missing Wall Street expectations by 8 cents a share. Revenue came in at $536.6 million, topping the analyst estimate and beating last year's quarter by 32.3%. Shares dipped 5.2% to $12.85.


(GLW) - Get Report

, the largest maker of fiber-optic cable, reiterated 20% to 40% annual growth forecasts for sales of its liquid crystal display glass business until 2006. Shares gained 3.3% to $6.20.

The 10-year Treasury note was down 10/32 to yield 3.94%. Crude oil for April delivery fell 2.3% to $30.95 a barrel, well off recent highs, while the dollar weakened against the yen and euro.

Overseas markets were higher, with London's FTSE 100 closing up 0.5% at 3765 and Germany's Xetra DAX up 0.4% at 2594. In Asia, Japan's Nikkei closed 1.2% higher at 8051, while Hong Kong's Hang Seng rose 1.3% to 9158.

The optimism this morning follows a day of moderate gains for the markets. On Tuesday, the Dow ended 0.6% higher at 8194. The S&P 500 rose 0.4% to 866, while the Nasdaq gained 0.6% to 1400.