NEW YORK (CNN/Money) - Stocks ended in the red Wednesday after war jitters caused a sell off, but Thursday will bring a slew of economic data and more retail earnings reports for investors to consider.

After two days of rallies on the hope a peaceful solution to the Iraq crisis might be found, the Nasdaq composite (down 12.22 to 1334.32, Charts), which had moved into positive territory for 2003 Tuesday, lost 0.9 percent and returned to the red for the year.

Meanwhile, the Dow Jones industrial average (down 40.55 to 8000.60, Charts) gave up 0.5 percent, and the S&P 500 index (down 6.04 to 845.13, Charts) slid 0.7 percent. The New York Stock Exchange logged its lightest volume of the year at just under 1.1 billion shares traded.

"We've had two days of pretty good rallies and now there's a bit of consolidation," said Robert Philips, president and chief investment officer of Walnut Asset Management. "We're not going to go anywhere meaningful until lots of these issues get resolved. When stocks get beaten down far enough, people get interested."

Several Iraq-related developments seemed to roil investors' nerves Wednesday, including a number of reports in the British press. A report in the Independent newspaper claimed U.S. and British intelligence are tracking three large cargo ships that left Iraq only days before United Nations' weapons inspections began in the country. According to the story, the suspicion is that the ships, which have been sailing the world's oceans for the past three months, could be loaded with Baghdad's weapons of mass destruction.

In another report, the Times said British Prime Minister Tony Blair is now pushing for a three-week delay on any military action against Iraq, in the hope more time will allow for some or all of the countries opposing an attack to change their minds. Such a delay would also allow for a crucial March 14 U.N. meeting.

Finally, the Financial Times reported Iranian-backed Iraqi opposition forces had made their way over the northern Iraq border with the intention of securing the frontier in the event of war.

Resumed talk of war, however delayed it might be, brought selling on Wall Street, which already was prone to take a breather after stocks rose for two consecutive trading sessions, traders said.

Many said they would need strong news about earnings and sales out of some big corporate names to feel any confidence about investing in the current market.

"If we see improvements in earnings outlooks, some kind of resolution in the Middle East, and improvements in consumer confidence we'd see a significant rally," said Ram Kolluri, chief investment officer at GlobalValue Investors. "But, I don't know when that's going to happen."

Investors will have a torrent of economic news and more earnings from retailers to consider Thursday. Before the opening bell, the government will release data on initial weekly jobless claims, which economists expect to rise to 385,000 from 377,000 last week, according to Briefing.com.

Also before trading begins, traders will get data on producer prices (PPI) for January, forecast to have risen, and the trade balance for December, expected to come in better than the prior month.

Shortly after trading begins, the Philadelphia Fed will release its index for February, expected to come in at 11 compared with 11.2 in January. Also, investors will get data on the leading indicators for January, forecast to be flat from a rise of 0.1 percent in December.

Several retailers report earnings Thursday, including Nordstrom (JWN: down $0.45 to $17.25, Research, Estimates), J.C. Penney (JCP: down $1.07 to $18.43, Research, Estimates), Liz Claiborne (LIZ: down $0.21 to $27.56, Research, Estimates) and Target (TGT: down $0.15 to $27.87, Research, Estimates). All four are expected to beat profits from the same quarter last year.

In corporate news after the closing bell Wednesday, a Reuters report said former Tyco International (TYC: down $0.29 to $15.26, Research, Estimates) Chief Financial Officer Mark Swartz had been indicted for evading nearly $5 million in federal income taxes, according to New Hampshire U.S. Attorney Tom Colantuono.

Also likely to catch investors' eyes Thursday, USB Bancorp said it plans to spin off its Piper Jaffray unit.

War jitters couldn't hold off gains among semiconductor stocks after closely watched Morgan Stanley chip analyst Mark Edelstone raised his view on the sector to "attractive" and upgraded his ratings on Intel (INTC: up $0.09 to $16.80, Research, Estimates),Texas Instruments (TXN: up $0.17 to $16.41, Research, Estimates), and Xilinx (XLNX: up $0.01 to $22.10, Research, Estimates) to "overweight" from "equal-weight."

Dow component Caterpillar (CAT: up $1.40 to $45.95, Research, Estimates) managed to make gains of nearly 3 percent -- against the market current -- after UBS Warburg upgraded the machinery company's shares to "buy" from "neutral" and raised its price target.

"The market has a split personality here," Kolluri said. "I am personally not convinced of anything. This is a deeply oversold condition that's long overdue for a technical bounce. Valuations in the equity market are not compelling. The market is starved right now for some decent news."

On the economic front, investors digested some mixed data.

The Commerce Department said housing starts edged up to a seasonally adjusted annual rate of 1.850 million units last month from a revised 1.847 million rate in December. Overall starts were at their highest since May 1986, while single-family starts reached their highest rate since November 1978. Economists had expected starts to come in at 1.77 million.

But, total permits to start housing construction, an indicator of builders' confidence in future business, fell 5.6 percent last month.

Declining stocks beat advancing stocks on the New York Stock Exchange and the Nasdaq by a ratio of 5 to 3. On the NYSE, 1.1 billion shares changed hands. On the Nasdaq, 1.2 billion shares traded.

Among key commodities, light sweet crude oil for April delivery rose 15 cents to $35.66 a barrel. Gold, also for April delivery, gained $5.70 to $350 an ounce in New York.

Bond yields fell, with the yield on the benchmark 10-year Treasury note down to 3.89 percent from 3.95 percent late Tuesday. The dollar fell against both the euro and the yen.

Most European markets ended lower Wednesday, while stocks in the Asia-Pacific region finished their trading session mixed.