NEW YORK (CNN/Money) - U.S. stocks managed a mixed performance in lackluster trade Monday, after Internet stock Yahoo! wired gains for the Nasdaq but Iraq, retail concerns, and weakness in financials dented the Dow industrials.

The Nasdaq composite (up 18.64 to 1381.69, Charts) rose 1.3 percent, while the Standard & Poor's 500 index (up 1.62 to 897.38, Charts) advanced modestly. The Dow Jones industrial average (down 18.03 to 8493.29, Charts), by contrast, logged modest losses.

The Dow and the Nasdaq traded in opposite directions for most of the trading session. Techs shifted into forward gear early after Yahoo! announced its proposed multimillion-dollar deal of Inktomi, while blue chips floundered in lackluster trade.

"We're wrapping up a year where we saw the Christmas rally happen in the autumn time frame," Bryan Piskorowski, market analyst with Prudential Financial, told CNNfn's Market Call. "There's not much gunpowder left in December, so it's a month of digestion."

"Also, global concerns have pushed money to the sidelines and it has remained there. As you move into 2003, the question becomes: Can the consumer hold on until we have corporate America pick up the torch and begin spending," Piskorowski said.

Over the weekend, the U.S. government said it will share intelligence with international inspectors concerning possible sites where Iraq is developing weapons of mass destruction. Last week, the Bush administration said Iraq's recent dossier on its weapons program constituted another "material breach" of the United Nations' resolution, adding to the threat of war in the region.

Market breadth was negative on light volume in a holiday-shortened week. On the New York Stock Exchange, decliners narrowly stayed ahead of advancers as 1 billion shares were traded. On the Nasdaq, losers also edged gainers as 1.1 billion shares changed hands.

Wall Street puts in a half-session on Christmas Eve Tuesday and is closed Wednesday, Christmas Day. On Tuesday's agenda is the November durable goods report. Economists forecast a rise of 0.9 percent compared with October's 2.4 percent jump.

Among the Dow laggards were shares of Citigroup (C: down $0.46 to $37.68, Research, Estimates). The financial services firm said it will take a hefty $1.5 billion charge in the fourth quarter as it increases reserves to cover last week's settlement with federal regulators and the New York attorney general, as well as Enron-related matters.

Citigroup's Salomon Smith Barney brokerage unit and other major Wall Street securities firms agreed Friday to pay $1.4 billion to settle claims of tainted brokerage research.

Retail stocks lost value amid more pessimism about the critical holiday sales. Discount chain leader and Dow stock Wal-Mart Stores (WMT: down $1.20 to $49.59, Research, Estimates) fell after warning that its critical December same-store sales -- or sales at stores open at least a year -- will be tracking the low end of its forecasts. Industry analysts said this year's holiday shopping season will be the worst for retailers in over 12 years as an economic slump takes its toll on U.S. consumers' spending habits.

Federated Department Stores (FD: down $1.08 to $27.84, Research, Estimates) also chimed in with a dour forecast.

But Yahoo! (YHOO: up $0.65 to $17.73, Research, Estimates)'smultimillion-dollar deal gave a much-needed boost to the sector. Shares of the Internet media company rose after it said it will acquire Inktomi (INKT: up $0.43 to $1.60, Research, Estimates), a provider of software applications, for $235 million in cash.

The morning's economic reports showed some improvement. The University of Michigan's consumer sentiment reading for December came in just a hair above forecasts at 86.7, compared with 84.2 in October. Economists had forecast 86.6, according to Briefing.com.

In addition, personal income rose a better-than-expected 0.3 percent in November compared with an anticipated 0.2 percent rise, while personal spending for the month came in at 0.5 percent, up from 0.4 percent in October.

Although all three market indexes are on tap to close out a third year of declines -- with the Dow off 15.2 percent, the Nasdaq off 29.1 percent, and the S&P 500 off 21.8 percent for the year -- a UBS Warburg investor sentiment index indicated that overall optimism was up for the second straight month as investors outlook for the financial markets improved.

The study showed that 69 percent of investors are optimistic that the year 2003 will be better for the financial markets than 2002, although investors are split over whether a U.S. military engagement in Iraq would hurt the U.S. economy, with 43 percent indicating it will be positive, and 47 percent saying it will be negative.

Gold shot up $4.60 to $345.60 an ounce in U.S. trading as investors continued to shift money to this "safe haven asset" amid global uncertainty.

Light crude oil futures jumped $1.45 to $31.75 a barrel in U.S. trading, near two-year highs, on the back of Iraq concerns and the ongoing strike in Venezuela, which accounts for a fifth of the world's oil exports.

Asian-Pacific stocks ended mixed Monday; Tokyo was closed for the celebration of the emperor's birthday. European markets also closed mixed.

Treasury prices fell, sending the 10-year note yield up to 3.97 percent. The dollar was weaker against the euro and the yen.