(Updates to midmorning)
By Denise Duclaux
NEW YORK, March 18 (Reuters) - Stocks wobbled near unchanged on Tuesday, a day after a more than 3 percent surge, as investors weighed hopes for a swift U.S.-led strike on Iraq against signs of a tepid economy and concerns about war's unwelcome surprises.
"Everything's got to go right for the market to keep rallying," said Todd Leone, head of listed trading at S.G. Cowen.
President George W. Bush on Monday night gave Saddam Hussein 48 hours to flee Iraq or face war. Some investors are waiting to see if an actual military strike on Iraq goes smoothly for the United States before pouring more money into the market.
Questions arose about the health of the U.S. economy after a report showing a tumble in U.S. housing starts last month. The Federal Reserve at the end of its policy-setting meeting this afternoon is expected to hold interest-rates steady but shift its risk assessment toward economic weakness
The blue-chip Dow Jones industrial average edged up 24 points or 0.30 percent to 8,166. The broad Standard and Poor's 500 added 0.43 of a point, or 0.05 percent, to 863. The tech-laced Nasdaq Composite Index shed 0.53 of a point, or 0.04 percent, to 1,391.
Tobacco stocks were hit after a New York Times report that the U.S. Justice Department, alleging a half-century of "fraudulent" and dangerous market practices, is demanding that the biggest U.S. cigarette makers be ordered to forfeit $289 billion in profits.
Altria Group Inc. sank $2.75, or almost 8 percent, to $32. R.J. Reynolds Tobacco Holdings Inc. fell $1.94, or 5 percent, to $34.75. UST Inc. dropped $1.14, or 4 percent, to $26.95.
Oil prices skidded as war appeared almost a certainty, weighing on oil stocks. Exxon Mobil Corp. , the world's largest publicly traded oil company, eased 12 cents to $34.93. Independent oil and gas producer Apache Corp. fell $1.10 to $58.66.
Human Genome Sciences Inc. rallied 87 cents, or 12 percent, to $8.04. The company said it was developing an immune system drug that could help thwart the effects of exposure to anthrax.
(With additional reporting by Vivian Chu)