A big loss from Disney weighed heavily on the Dow, which recovered from several slides below 9,000 before capitulating during the final hour. The decline came despite the news that Chrysler had agreed to be acquired by Germany's Daimler-Benz for stock initially valued at about $ 38 billion, or $ 60 per share.

Chrysler's shares, which soared more than 7 points on Wednesday after the two companies confirmed their merger talks, rose sharply again, but Daimler's US shares surrendered some of the prior day's gains. The prospect of a merger-mania in the auto industry wasn't enough, however, to steal the spotlight from the speech by Federal Reserve Chairman Greenspan, or Friday's report on payroll andwage levels a dominant force behind inflation.

Stocks see-sawed last week amid conflicting signals on whether the inflation-leery Federal Reserve might try to slow the economy with higher interest rates.

But Greenspan, addressing an international banking conference in Chicago, provided no new clues on that debate. Instead, he stressed the need to upgrade world financial regulations to help prevent or at least cope with future Asian-style currency crises.

The Standard and Poor's 500 fell 9.78 to 1,095.14, and the Nasdaq composite index fell 21.54 to 1,835.14.

Declining issues outnumbered advancers by nearly a 2-to-1 margin on the New York Stock Exchange, with 1,019 up, 1,942 down and 537 unchanged. NYSE volumes totaled 581.62 million shares compared with 593.12 million in the previous session.