I agree with Jeger. My '99 Ram did this exact same thing when the speed sensor went. The speedo would flop around and the ABS light stayed on, in fact I was lucky if my speedometer worked at all. The speed sensor was located on the rear axle on the Dodge (it was near the passenger rear, the drive wheel), but not sure on the Jeep. It may be in the rear diff. If you can find it, it's an easy fix. I had it done at my dealer and it cost me $40 - so it should cost you 1/4 that if you DIY.
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