NEW YORK (CNN/Money) - Stocks toyed with unchanged into the last hour of trading Friday as continued concerns about how long it would take to close out the war in Iraq played a significant role in investors' choice to play it safe ahead of the weekend.

Around 3 p.m. ET, the Dow Jones industrial average (up 16.32 to 8256.70, Charts) and the S&P 500 index (up 1.45 to 877.90, Charts) hung near unchanged after flip-flopping between positive and negative territory throughout the day. The Nasdaq composite (down 12.85 to 1383.73, Charts), the weakest performer of the three, logged declines of more than 1 percent.

All three indexes looked likely to end the week up as investors cheered the possibility of a quick end to the war, in contrast to the market's performance last week, when the speculation went that the conflict in Iraq would be prolonged.

"We had negative unemployment data, but the market's not focusing on that," said Peter Cardillo, director of research at Global Partners Securities. "The market continues to focus on the news from Iraq. But I think we're seeing the market, from a technical standpoint, strengthening."

With U.S. troops controlling the national airport in Baghdad and some 2,500 Iraqi National Guards surrendering, Wall Street watched the war action with glee and looked the other way when the March employment report showed some 108,000 non-farm jobs vanished in the month. The unemployment rate stayed the same, however, at 5.8 percent.

Ignoring economic weakness at home in the hope that much of it will be resolved when the war in Iraq is over has been the market's modus operandi all of this week. It started Tuesday when the market shrugged off news that the manufacturing sector of the economy is actually in contraction and continued Wednesday when Wall Street barely noticed that factory orders in March shrank by twice what had been expected. On Thursday, news that many more people found themselves filing for unemployment benefits than economists had predicted was largely ignored as well.

The going bet in the market is that the one big thing preventing businesses and consumers from spending is the war in Iraq. But now that the war seems as though it will be over in weeks, not months, Wall Streeters found no reason to sell stocks in the face of the depressing jobs report.

"Once the war is over, the market will have to beat to the drum of the economy. But, for now, it's dancing to the tune of war," said Cardillo.

In the latest news from Iraq, the country's information minister said Iraqi troops would not use chemical weapons, but might stage suicide attacks using people as human shields. Iraqi TV also released footage of Saddam Hussein encouraging his people to use any means necessary to fight off coalition forces. Whether the tape was new or old has not yet been confirmed. There is much speculation as to whether Hussein is alive, dead or out of the country. (For full war coverage, go to CNN.com.)

Market breadth was mixed, with eight stocks rising for every seven that fell on the New York Stock Exchange as 954 million shares traded. On the Nasdaq, decliners edges past advancers by a margin of 8 to 7 on volume of 1.1 billion shares.

Few individual issues stood out. Dow member Alcoa (AA: up $0.12 to $20.03, Research, Estimates), which after the closing bell is set to become the first industrial component to report its earnings this season, edged slightly higher.

The Dow continued to be pressured by Altria Group (MO: down $1.27 to $28.43, Research, Estimates), formerly Philip Morris, after news late Wednesday that the tobacco maker is likely to be sued by 46 states if it misses a $2.5 billion payment for a tobacco settlement agreement due to these states on April 15.

Helping the airline sector move higher, Congressapproved more than $3 billion in aid for airlines, which are still feeling the effects of the Sept. 11 attacks and the slowdown in travel due to the war in Iraq. Shares of America West (AWA: up $0.24 to $2.52, Research, Estimates) led the pack, rising nearly 10 percent. The Dow Transportation index gained a little less than 1 percent.

The relatively calm mood in stocks soured the day for U.S. Treasury bonds. The 10-year note lost 8/32 of a point in price, its yield edging up to 3.94 percent. The dollar advanced against major currencies.

World markets ended mostly higher, with most European stocks scoring gains and Asian exchanges rising as well.

Key commodity prices retreated. Light crude oil lost 37 cents to $28.60 a barrel in New York. Gold eased 30 cents to trade at $326 an ounce in New York.