Stocks fell yesterday, one day after the US-led retaliatory strikes started in Afghanistan, with investors jangled by the scope of the response to air attacks on the US nearly four weeks ago.

"We've got the start of military action, so that cast some uncertainty over the marketplace," said Michelle Clayman, chief investment officer at New Amsterdam Partners.

"Any time you actually engage in warfare there's some trepidation." Early strength in semiconductors and other beaten-down high-technology sectors faded, but more modest gains still helped put a floor under the market.

Three of the biggest defence-contractor shares traded to 52-week highs. Northrop Grumman, which makes the B-2 stealth bomber and is a leader in electronics and surveillance technology, added 10 cents to $107.60, building on its 30 per cent rise since September 11th. Raytheon, which makes the Tomahawk cruise missile, were up $1.33 to $36.30. General Dynamics gained $2.39 at $94.90.