(Updates to midday)
By Denise Duclaux
NEW YORK, March 19 (Reuters) - Stocks slipped on Wednesday, retreating after five straight sessions of gains in the blue-chip Dow, as slack software sales from Oracle Corp. and the final countdown to war rattled Wall Street.
"Many traders prefer to wait to see what will take place in Iraq as we move closer to the hour of truth," said Harry Michas, stock index futures trader at manmarketmonitor.com. "I think the market will have to move for some profit taking before the day is over as the market draws closer to a confrontation with Iraq."
War could be only hours away as U.S.-led forces moved units into position for a war to oust Iraqi President Saddam Hussein. U.S. President George W. Bush said his forces will invade if Saddam does not flee by 8 p.m. Wednesday evening, Washington time, which is 4 a.m. Thursday in Iraq (0100 GMT).
Oracle, the world's No. 2 software maker, sank 8 percent, raising worries about the corporate outlook with war around the corner and the U.S. economic rebound looking sluggish. Oracle's key software sales fell short of expectations, and the company offered a murky outlook.
"On the corporate front, we are not getting any feathers for the bull's cap today," said Bryan Piskorowski, market commentator at Prudential Securities.
The broad Standard and Poor's 500 index eased 1 point, or 0.22 percent, to 864. The tech-laced Nasdaq Composite Index lost 16 points, or 1.18 percent, to 1,383. The blue-chip Dow Jones industrial average shed 16 points, or 0.21 percent, to 8,177.
The Dow has surged more than 8 percent in the last week on hopes for a short war, but worries remain about risks such as Iraq setting oil wells afire, attacks on the United States or a U.S. invasion getting bogged down.
Declining stocks outpaced advancers by a ratio of 18 to 13 on the New York Stock Exchange and by 3 to 2 on Nasdaq. More than 697 million shares changed hands on the Big Board, and more than 927 million on Nasdaq in moderate trading.
ORACLE SLAMS SOFTWARE MAKERS
Concerns remain over the health of the U.S. economy. Consumer sentiment has deteriorated, the labor market is struggling and corporate profit growth is shaky.
Oracle sounded a sour note, skidding $1.04 to $11.21 and dragging on the business software sector. Oracle said quarterly revenues may range from down 6 percent to up 2 percent due to the war threat and rising energy prices.
The Goldman Sachs software index lost 3.72 percent. PeopleSoft Inc. sank $1.50 or more than 8 percent, to $16.75. Siebel Systems Inc. fell 65 cents, or almost 7 percent, to $8.66. BEA Systems Inc. dropped 94 cents, or nearly 8 percent, to $10.98.
Tobacco shares bounced back after a beating on Tuesday amid renewed talk of the U.S. Justice Department's case against the industry, in which it said the United States is entitled to $289 billion in forfeited profits from cigarette makers.
Morgan Stanley raised its investment rating for the tobacco industry to attractive from in-line, saying "capital markets are now pricing into the sector a 'worst-worst' case with respect to litigation and fundamentals."
Altria Group Inc. , parent of Philip Morris USA, rose $1.30, or 4 percent, to $33.90. R.J. Reynolds Tobacco Holdings Inc. rose $1.24, or more than 3 percent, to $34.81.
Semiconductor manufacturer Microchip Technology Inc. tumbled $2.72, or more than 11 percent, to $21.02. The company cut its fourth-quarter revenue and earnings guidance, saying sales have slowed because of U.S. preparations for a war with Iraq and tensions with North Korea.
The Philadelphia Stock Exchange semiconductor index slumped 2.45 percent. Intel Corp. , the world's largest semiconductor maker, lost 36 cents, or almost 2 percent, to $17.89.
Corning Inc. , the No. 1 maker of fiber-optic cable, jumped 25 cents, or 4 percent, to $6.25. The company reiterated that it expects sales at its liquid crystal display glass business to grow 20 percent to 40 percent annually through 2006. (With additional reporting by Doris Frankel)