NEW YORK (CNN/Money) - Stocks plunged to a lower close Wednesday, as investors shifted some of their focus back home to concerns about economic reports and corporate warnings after getting a glimpse of the approaching end to war.

The Dow Jones industrial average fell 1.2 percent, while the Nasdaq composite dropped 1.9 percent. The S&P 500 index logged a 1.4 percent decline. Selling picked up in the last minutes of the trading session.

"We bought on the rumor and are selling on the news," said Art Hogan, chief market analyst at Jefferies & Co. "We've priced in the victory here. There's very low participation -- there's just no money in the game. Folks are starting to shift focus now."

Early in the day, investors focused on TV footage of jubilant Baghdad residents dancing on a fallen statue of Saddam Hussein, and stocks rose amid a feeling of optimism that the end of the war would come in a matter of days.

But minutes after the statue was toppled with the help of a U.S. tank, traders were back to speculating whether the end of war would bring an extended relief rally to the broad market, or if investors would decide to focus on the constant stream of weak economic indicators and corporate profit warnings.

Those concerns spiraled into sizeable stock declines in the last hour of trading, as investors' focus shifted away from Iraq toward home.

And Thursday is another day. Investors will get a reading on the February trade balance before the opening bell Thursday. Economists on average expect it to show a deficit of $42 billion versus January's $41.1 billion gap, according to a survey by Briefing.com. The wider the deficit, the more it cuts into gross domestic product.

The weekly jobless claims number also is set for Thursday morning. Economists expect claims fell to 425,000 last from 445,000 the preceding week.

On the corporate front, Yahoo! (YHOO: down $0.94 to $22.87, Research, Estimates) reported first-quarter earnings of 8 cents a share after the closing bell Wednesday. The earnings rose from 2 cents a share a year earlier and beat Wall Street forecasts of 6 cents a share. The Internet portal operator also guided higher than analysts' estimates for revenues in the second quarter.

For the better part of 2003, investors have focused their energy on the uncertainty leading up to the first attack on Iraq, followed by a shift to events occurring during the war. Dismal economic news and weak corporate earnings were brushed off, as investors awaited indications of when the war with Iraq might end -- hoping that a conclusion would bring a renewed interest in corporate and consumer spending, and add a needed spark to growth in the economy.

Several strong market rallies before and throughout the war helped the Nasdaq turn positive for the year, while the Dow and the S&P lag slightly behind their starting points in 2003. But now, investors are likely to turn their focus to the slow economic growth domestically, as well as the cost of occupying Iraq.

So far, corporations have issued many more profit warnings for the first quarter of 2003 than positive pre-announcements. Still, some market watchers saw a distant light at the end of the tunnel.

"Negative pre-announcements are outpacing positive ones by a three-to-one margin -- and that's very high," said Michelle Clayman, chief investment officer at New Amsterdam Partners. "The big question is whether the market can look through that. We expect consumer confidence will increase and business confidence will start to turn up as well."

Many traders said they expect economic and corporate news to continue to look dismal into the second quarter, but expect leading indicators, like the stock market, to eventually take the reins from lagging indicators, like unemployment numbers and manufacturing activity.

Market breadth was negative. On the New York Stock Exchange, decliners edged out advancers by a 6-to-5 margin as 1.3 billion shares changed hands. On the Nasdaq, losers beat winners by a margin of 4 to 3 as 1.3 billion shares traded.

U.S. Treasury bonds were higher, with the 10-year note gaining 12/32 of a point in price for a yield of 3.89 percent. The dollar rose against the yen but trended lower versus the euro.

Commodity prices were mostly higher. Light sweet crude futures for May delivery gained 85 cents to $28.85 a barrel in New York. Gold for June delivery climbed $3.30 an ounce to $326.20.

European stocks and Asian markets both ended mostly lower.