NEW YORK (CNN/Money) - Stocks gave up early gains to end lower Thursday on one of the lightest trading days of the year.

The Dow Jones industrial average (down 15.50 to 8432.61, Charts) saw its triple-digit gains evaporate to close with a small loss, while the Nasdaq composite (down 4.58 to 1367.89, Charts) and the Standard & Poor's 500 index (down 2.81 to 889.66, Charts) also edged lower.

Market pros said volatility was likely to remain in the final days leading up to the New Year, as investors try to put another disappointing year for stocks behind them. Meanwhile, global tensions and the sluggish economy and corporate profits continue to weigh on investors.

"I think the market is struggling a bit here. My guess is that we're just going to limp toward the end of the year," Ted Weisberg, trader with Seaport Securities, told CNNfn's Street Sweep.

Stocks had rallied for most of the day after a big drop in jobless claims encouraged investors. But most market analysts discounted the day's runup, pointing out the anemic trading volume, the Iraq factor and retail woes.

Analysts said that any belated "Santa Claus" bounce for stocks -- if it holds until New Year's Eve -- would likely be too little, too late to prevent another year of stock losses. With three sessions left in 2002, stocks are set for their first three-year decline since 1941. The Dow is off 15.8 percent for the year so far, the Nasdaq is down 29.9 percent, and the S&P 500 has lost 22.6 percent.

Market breadth was barely positive. On the New York Stock Exchange advancers led decliners about 9 to 7 as just 709 million shares were traded. On the Nasdaq gainers narrowly edged losers as 805 million shares changed hands.

Among the Dow laggards were shares of Citigroup (C: down $0.48 to $36.02, Research, Estimates). The firm filed with U.S. regulators to issue up to $15 billion worth of debt securities, index warrants, preferred and common stock, and depositary shares. Citigroup said it would use proceeds from the sale to fund its business units and finance possible acquisitions.

Tech blue chips IBM (IBM: down $1.26 to $78.50, Research, Estimates) and Microsoft (MSFT: down $0.43 to $53.39, Research, Estimates) also dented the blue-chip index.

Weakness in drug stocks weighed down the broader market. Pfizer (PFE: down $1.36 to $30.02, Research, Estimates) pulled lower after a study showed that patients using the arthritis drug Celebrex, marketed jointly by Pharmacia (PHA: down $2.02 to $40.98, Research, Estimates) and Pfizer, had a 5 percent chance of suffering more bleeding from their ulcers, a symptom Celebrex was designed to avoid.

Biotechnology company Amgen (AMGN: down $0.77 to $50.68, Research, Estimates) slipped following a court's dismissal of its complaint related to the U.S. government's plan to cut the Medicare reimbursement payment for Amgen's anemia drug Aranesp.

But Philip Morris (MO: up $0.32 to $41.80, Research, Estimates) managed to avoid the downturn. The cigarette maker rose after a smoker with lung cancer said Wednesday she would accept a reduced $28 million punitive damage judgment against the cigarette maker, even while appealing a judge's decision to slash the jury's original $28 billion award.

Retail stocks, which had managed to resist the late-afternoon turnaround, pared gains. By contrast, Dow component Wal-Mart (WMT: up $0.06 to $49.76, Research, Estimates) erased its early-day losses to close up for the day, after warning that December sales at stores open a year or more will only be up 2 percent-to-3 percent compared with the same period a year earlier. That's below the 3 percent-to-5 percent forecast previously issued by the world's No. 1 merchant. Wal-Mart said that even though sales leading up to Christmas produced more than $1 billion in companywide revenue, it wasn't enough to lift overall performance for the month.

The day's economic report was mostly positive. The latest update on the labor market showed a significant decline in the number of people filing for unemployment benefits over the past week. Jobless claims for the week that ended Dec. 21 dropped an adjusted 60,000 to 378,000 from 438,000 in the previous week.

But the closely followed four-week average of first-time jobless benefits applications edged up 2,500 to 404,500. Analysts cautioned the holiday season sometimes distorts the picture, leading to wide swings in the weekly update.

Most overseas markets were closed. Those Asian-Pacific markets that were open Thursday finished mixed, with Tokyo's Nikkei index up 2.3 percent but South Korea and Singapore down for the day. European markets were closed for the extended Christmas holiday.

Treasury prices rose, with the 10-year note yield at 3.91 percent. The dollar fell to three-year lows against the euro and also slipped against the yen.