NEW YORK (CNN/Money) - Stocks got a big lift from the news out of Iraq Monday, but the gains had all but faded by the close as some investors started to look beyond the war.

News that U.S. troops were moving freely through most of Baghdad gave the market an initial jolt and stocks shot higher at the open, but then it was a long, slow process of grinding back down through the rest of the session.

"Everyone is afraid of getting left behind when the war ends, but once investors begin to turn their focus to fundamentals, stocks likely won't be able to hold these levels," Brett Gallagher, head of U.S. equities at Julius Baer, said as stocks were starting to fade in afternoon trading.

Sure enough, by the close, the major market averages were barely higher. The Dow Jones industrial average (up 23.26 to 8300.41, Charts) held on to a small gain of about 0.3 percent , while the S&P 500 index (up 1.08 to 879.93, Charts) barely ended higher. The Nasdaq composite (up 6.00 to 1389.51, Charts) was the biggest winner of the day, rising about 0.4 percent.

Traders said some uncertainty re-entered the market as investors, already convinced the war would end well for the United States, started focusing on the economy and earnings.

Tuesday could bring more hesitation. Shares of RF Microdevices (RFMD: Research, Estimates), a chipmaker, and Microchip Technology (MCHP: Research, Estimates), a semiconductor manufacturer, both fell in after-hours trading after the companies warned that quarterly results would fall short of Wall Street forecasts.

"The next thing that the market is going to look for is the next wall to go over [after the war in Iraq], and that's earnings numbers coming out," a trader at Legg Mason Wood Walker in Baltimore told Reuters.

The Dow industrials jumped about 240 points early Monday as investors rewarded stocks on news that coalition troops had stormed into Baghdad and looked to be on their way to securing several areas of the city. But as the session progressed sellers emerged.

"I think what we're doing today is selling into the rally," said Bill Roe, portfolio manager at Melhado, Flynn & Associates. "We're positive on the market for the time being, but once this thing is settled, we'll have to take another look. We'll have a whole new ball game -- then we're talking about the economy."

There were no major economic reports Monday but Tuesday investors get a reading on wholesale inventories in February, which economists polled by Briefing.com estimate rose 0.2 percent after a decline of 0.1 percent in January.

For months now the theory has been that the U.S. economy, long due for a much needed recovery, has been stilted by the uncertainty of war. Once the war is won by the United States and its allies, some investors say, businesses and consumers will celebrate the victory by going on a spending spree that would give a shot in the arm to the ailing economy.

Before that happens, however, investors will have to get over the first-quarter earnings season, which will hit its height next week and next. This week is likely to be heavy in pre-announcements, the euphemism companies have adopted for warning that their performance won't live up to expectations.

Earnings or no earnings, Wall Street's eyes on Monday remained glued to the latest reports from Baghdad, where at least 1,000 U.S. troops went on several forays, taking over a couple of Saddam Hussein's presidential palaces and toppling a 40-foot statue of the Iraqi leader.

U.S. Marines seized the Iraqi Atomic Energy Commission headquarters, where they said they found protective suits, masks and unidentified substances in jars. Some substances have been sent back to the United States for testing, according to reports.

Also a sign that the end could be near, U.N. Secretary-General Kofi Annan named Rafeeuddin Ahmed, a former U.N. Development Program official, as special adviser to coordinate with Security Council members on postwar Iraq -- although he said he didn't expect the United Nations to play a big role. (For the latest reports on the war, go to CNN.com.)

Uncertainty about the level of resistance coalition forces would face against the Iraqi fighters as they made their way toward Baghdad weighed on stocks in the later part of last week, but the major markets still managed gains. The Dow rose 1.6 percent last week and the Nasdaq gained 1 percent.

On Monday, even companies that did warn of inferior performance in the first quarter were rewarded generously as investors ignored the bad news. Software maker Siebel Systems (SEBL: up $0.24 to $7.99, Research, Estimates), which admitted Friday after the bell that software sales in the first quarter were much weaker than initially estimated, gained about 3 percent.

Shares of CNN/Money parent AOL Time Warner (AOL: up $0.61 to $12.16, Research, Estimates) got a boost of about 5 percent after Morgan Stanley upgraded its investment rating on the media company to "overweight" from "equal weight," saying that balance sheet risk is minimized by the potential for asset sales and internally generated free cash flow.

By far the biggest gainer on the Dow was Alcoa (AA: up $1.59 to $21.63, Research, Estimates), which Friday started the first quarter earnings season by reporting an operating profit that exceeded expectations. The stock jumped nearly 8 percent.

Market breadth was positive, though the ratio of gainers over losers declined throughout the day. On the New York Stock Exchange winners beat losers by about 5 to 3, as 1.5 billion shares traded. On the Nasdaq, advancers beat decliners by about 3 to 2 on volume of 1.5 billion shares.

The stock market boost left U.S. Treasury bonds a bit dented, although they managed to win back some early losses late in the day. The 10-year note lost 6/32 of a point in price, its yield jumping to 3.97 percent. The dollar was little changed against the euro and slipped versus the yen.

Investors rushed out of gold and oil. Light sweet crude for May delivery shed 66 cents to trade at $27.96 a barrel in New York. Gold for June delivery lost $3.80 to $322.20 an ounce.

The rally spread to overseas markets as well. Stocks in Europe surged to a higher close, and Asian markets enjoyed strong advances overnight.