A grim combination of higher oil prices and lowered outlooks from companies including Colgate-Palmolive Co., Unilever PLC and the New York Times Co. sent stocks sliding Monday. Blue chips bore the brunt of the selling.
The negative news from Colgate-Palmolive, its first profit warning in nearly a decade, and a brokerage downgrade of Citigroup Inc. pressured the Dow Jones industrials. Trading was light, as many investors stuck to the sidelines ahead of a key meeting of the Federal Reserve. But analysts noted unusually strong performance among semiconductor shares despite forecasts of slower growth from chipmakers. The Philadelphia semiconductor index surged 2.9 percent.
"It seems a contrarian view is developing in the tech sector. There's a feeling that they're probably oversold, and as a result we're seeing investors having second thoughts about unloading them," said Peter Cardillo, chief strategist with S.W. Bach & Co. "Unfortunately, the market as a whole is going to continue to live with this oil issue; there's no indication prices are going to collapse any time soon, so it will remain a daily focus."
The Dow was down 79.57, or 0.8 percent, at 10,204.89, after a drop of 0.3 percent last week.
The broader gauges also fell. The tech-dominated Nasdaq composite index, buoyed by chip stocks early in the session, gave back those gains and closed down 2.02, or 0.1 percent, at 1,908.07, after a weekly gain of 0.8 percent. The Standard & Poor's 500 index shed 6.35, or 0.6 percent, to 1,122.20, after advancing 0.9 percent last week.
Energy costs and earnings outlooks have competed for investors' focus in recent weeks, but attention returned to interest rates ahead of the Fed's Open Market Committee meeting set for today. Most economists agree the Fed will continue to tighten short-term interest rates at a measured pace by raising the federal funds rate another quarter of a percentage point to 1.75 percent. If the Fed steps back from its policy and decides not to raise rates, the markets could interpret it as a signal the economy is not doing as well as previously hoped.
The earnings picture for the current quarter remains somewhat cloudy amid a series of gloomy outlooks. Although analysts remain largely upbeat about the market's underlying fundamentals, investors are growing increasingly worried about slower growth in the second half.
"A couple of the preannouncements we've had today have hurt, as well as the direction of consumer spending, particularly in terms of discretionary spending in the wake of last week's hurricanes," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "Obviously people are going to have to put money toward rebuilding things, so that may put some pressure on the retailers."