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With no major geopolitical developments in the market this week, stocks struggled to find direction. But a late rally Friday helped stocks finish firmly in the green for a second-straight week.

The

Dow Jones Industrial Average

ended the week up 109 points, or 1.4%, to 8018, while the

Nasdaq

closed higher 39 points, or almost 3%, to 1349. The

S&P 500

finished the week up 14 points, or 1.5%, to 848.

Mimicking its performance from last week, the market rallied strongly on Friday, this time as options expired and traders covered short positions. That helped the major averages to end the week on another up note.

David Briggs, head of equity trading at Federated Investors, said concerns about a war with Iraq continued to influence trading, but he noted that the intensity of the situation seemed to die down.

"The pressure was so intense

in the prior week that we took a bit of a break," he said. "The snowstorm distracted us and some people were saying

the geopolitical standoff is not that bad."

As a result, no discernible trend or theme emerged this week, and midweek losses were sandwiched by gains.

After the long holiday weekend, investors returned to the market Tuesday in a buying mood. Some analysts said the gains were part of an oversold bounce following almost five weeks of losses, but others attributed the move to a growing sense that war with Iraq had been delayed.

Over the weekend, huge peace demonstrations had been staged around the world, and late Monday, members of the European Union reached a compromise that appeared to provide more time for U.N. inspectors to disarm Saddam Hussein.

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Still, some analysts questioned whether stocks were rallying on this news alone, becasue delaying war merely leaves investors in limbo for a longer period of time.

Indeed, war jitters re-emerged on Wednesday when reports surfaced that the U.S. and Britain had been tracking three ships that left an Iraqi port shortly after U.N. weapons inspections began. A British newspaper said officials worry the vessels, which have been sailing the open ocean for months, could be carrying banned weapons.

Still, Wednesday's losses were fairly muted, and volume was very light. On Thursday, a trio of weak economic reports and disappointing corporate news influenced trade more than anything else.

SBC Communications

(SBC)

dragged the Dow down, after the Federal Communications Commission voted to allow states to decide whether they wanted to force local phone companies to open their networks to competitors.

Boeing

(BA) - Get Boeing Company Report

was also lower after J.P. Morgan expressed concern about the firm's earnings estimates.

Meanwhile, a larger-than-expected increase in initial jobless claims, a big jump in inflation at the wholesale level and news that the U.S. trade deficit ballooned to a record $44.2 billion in December, also weighed on the market.

A tame consumer price index on Friday offered some relief to investors, however, and while nerves were tested when a barge exploded at an

ExxonMobil

(XOM) - Get Exxon Mobil Corporation Report

loading facility on New York's Staten Island, the blast and ensuing fire had little impact on stocks once it was confirmed as an accident and not a terrorist action.

Although stocks ultimately ended higher for the week, Tom McManus, an analyst at Banc of America, noted that demand for domestic equity funds, based on weekly data from AMG, remained in negative territory. In the latest holiday-shortened week, net redemptions amounted to $700 million. Still, that was only about one-third as heavy as the average weekly outflow over the past month.

On the earnings front, some 442 S&P 500 companies have reported earnings so far, with 60% beating expectations, 21% matching and 19% missing the estimates.

"Despite any positive earnings surprises, the markets have all but rendered the year-end reporting season a nonevent against the top-down concerns on which they continue to trade," said Joseph Kalinowski, chief investment officer at Ehrenkrantz King Nussbaum.