Stocks scrambled back from a sell-off on Friday after an anthrax scare in New York set the market sinking, but still finished slightly lower as economic jitters continued to weigh.

A drop in retail sales and an earnings warning from credit card issuer Providian Financial Corp hurt stocks initially.

But the market posted its biggest loss on a report that an employee of NBC news in New York had tested positive for anthrax, a bacteria whose spores are potentially deadly.

The news, which follows three cases of anthrax in Florida, initially spooked investors, and the market fell as much as 3 per cent. Stocks turned around in the last half hour to regain their earlier levels.

"This (fear) is going to go on for a long time," said Keith Gertsen, head of Nasdaq trading for Deutsche Banc Alex. Brown.

"We can't let this level of distraction get to us."

The Dow Jones industrial average lost 66.43 points, or 0.71 percent, to close at 9,344.70. Standard & Poor's fell 6.59 to close at 1,090.84.