New York — Wall Street made an expected retreat Wednesday, sending technology and blue chip stocks sliding on a mix of earnings worries and profit-taking from the Dow Jones industrials' big three-day rally.
The technology-focused Nasdaq composite index fared the worst, falling 6 percent on a profit warning from Nortel Networks that stoked fears of more problems ahead for networking and telecom stocks.
"We had broad-based selling pressures in technology today," said Tom Galvin, chief investment officer at Credit Suisse First Boston. "Clearly, some people are still very worried about this sector and how it's going to perform in the months ahead."
But some giveback also was to be expected after the market's rally.
"You've had a 10 percent run-up in the indexes since last week," Galvin said.
The Dow closed down 162.19 at 9,785.35, a 1.6 percent loss. The decline ended the Dow's three-day, 558-point winning streak, but the blue chips managed to hang on to 70 percent of their gains.
Broader stock indicators also lagged. The Standard & Poor's 500 index was down 28.88 at 1,153.29, a 2.4 percent loss, while the Nasdaq composite index fell 118.13 to 1,854.13.
Investors pummeled Palm, which fell $7.44 to $8.06 for a 48 percent loss, after the handheld computer company announced job cuts and reduced its quarterly forecast. News of job cuts at Disney sent its stock down 84 cents to $28.36.
Beverage and health care stocks were among the few winners, reflecting investors' desire for less risky investments.
Stocks began recovering late last week from a 10-session slump that included a 1,468-point drop in the Dow. A better-than-expected consumer confidence report Tuesday, which suggested consumer spending might be able to lift the economy out of its malaise, added to buyers' enthusiasm.
But by Wednesday, pessimism had reasserted itself on Wall Street, as investors realized weak corporate earnings might continue for a while.
"The desperation was last week. Now we're finally getting to the acceptance phase. The casino has closed," said Scott Bleier, chief investment strategist at Prime Charter. "You have to let nature take its course. There may be no magic bottom and this may take a while."
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