The fourth quarter of 2001 got off to a choppy start Monday as investors wrestled with apprehension over weak economic data, more profit warnings and apprehension over likely U.S. retaliation for last month's deadly attacks.

The blue-chip Dow Jones industrial average dropped 10.73 points, or 0.12 percent, to 8,836.83, after falling more than 1.3 percent earlier.

The technology-laden Nasdaq Composite gave up 18.36 points, or 1.22 percent, to 1,480.44, after losing about 2.7 percent earlier. The broad Standard & Poor's 500 index lost 2.39 points, or 0.23 percent, to 1,038.55.  

October — the anniversary month of the 1929 and 1987 crashes — is a scary month for investors. It ranks behind September as the worst month for stocks over the past 50 years, according to research firm MarketHistory.com.

The stock market rebounded from three-year lows last week but wrapped up its worst quarter since 1987. Investors, already burned by steep market slides before the Sept. 11 attacks, now are weighing the fallout from the attacks on the World Trade Center and the Pentagon that left thousands missing or dead. 

"What everybody is looking for are signs the economy is rebounding,'' said Erik Gustafson, a portfolio manager at Stein Roe & Farnham, which oversees about $22 billion. ``Clearly we were all looking for that intensely before the events of Sept. 11. Now we're looking toward re-establishing confidence.''

The market found little support from the National Association of Purchasing Management's monthly gauge of manufacturing activity, which fell to 47.0 in September from a reading of 47.9 in August.

Although the NAPM found that the manufacturing sector contracted in September for the 14th consecutive month, the results were still slightly better than expected.

"What the market is reacting to is a growing sense that this is going to be a long haul. The terrorism campaign will take a long time and our lives are going to be altered to a great degree and not in a way that is bullish,'' said Charles Pradilla, chief investment strategist at SG Cowen Securities. "If economic data is more or less in the consensus, as this was, it's not going to affect the market significantly.'' 

Semiconductor shares like Intel Corp. slipped after a Wall Street house chopped earnings estimates amid price wars and soft chip demand. Exxon Mobil Corp. joined other oil heavyweights in a slump triggered by a drop in crude prices. But the market managed to close well off its lows as investors nibbled at traditional safe havens like utilities, tobacco, gold and health-care stocks.

All eyes were on the Federal Reserve, which is meeting on Tuesday to cut interest rates for the ninth time this year in order to shore up an economy that many on Wall Street believe is in recession. 

Of the 25 primary dealers of U.S. government securities surveyed by Reuters last week, 21 forecast the central bank would lower the 3.0 percent federal funds rate on overnight bank lending to 2.50 percent and four said it would cut that key rate to 2.75 percent. 

``There are a lot of uncertainties that are going to remain with us for a while,'' said Stanley Nabi, managing director at Credit Suisse First Boston, which oversees $110 billion. ``But even if one assumes that we are going to have a rather deep recession, we are going to most likely be in some kind of recovery by the second quarter of next year.'' 

Losers outnumbered winners by a ratio of 3 to 2 on the New York Stock Exchange and a margin of about 11 to 6 on the Nasdaq. More than 1.17 billion shares changed hands on the Big Board and more than 1.49 billion on the Nasdaq. Volume returned to normal levels after hitting record levels in the days following the attacks. 

Dow component Exxon Mobil, the No. 1 U.S. oil company, shed 31 cents to $39.09. Oil stocks were stung by falling crude prices after the cartel of OPEC producers decided not to curb output to prop up prices. 

Citigroup Inc. jumped $1.25 to $41.75 and helped support the Dow after investment firm Credit Suisse First Boston raised its rating on the financial giant. 

Wall Street house Merrill Lynch cut its earnings estimate for Intel and Advanced Micro Devices Inc. amid soft demand for computer chips. Intel fell 43 cents to $20.01, and AMD lost 22 cents to $7.93. 

The airline sector, battered by dwindling passenger numbers after the Sept. 11 attacks, continued to rebound, helped by the government's rescue package. American Airlines parent AMR Corp. rose 76 cents to $19.90, while Continental Airlines jumped 77 cents to $15.77. 

More companies blamed the September attacks for denting upcoming results. 

Computer security company RSA Security Inc. tumbled $2.56 to $10.90 after saying quarterly results would fall short of expectations, from the delay or cancellation of orders after the attacks. 

Entertainment, hotel and gaming company MGM Mirage dropped $1.08 to $21.40. The company said its quarterly earnings will fall ``substantially below'' estimates as consumers have cut back on travel and Las Vegas is attracting fewer visitors. 

SunGard Data Systems slumped $2.84 to $20.53 after the financial services software company said quarterly earnings will fall short of market expectations due to the attacks. 

The September National Association of Purchasing Management index, a gauge of manufacturing activity, fell less than expected, but failed to prop up the market. 

The day's other economic data was gloomier. The Commerce Department said personal income in August was unchanged from July, while personal spending rose 0.2 percent, both slightly weaker than expected. 

Construction spending slid 1.1 percent in August, weaker than anticipated, and its steepest fall since July 2000. 

The University of Michigan, which compiles a gauge of U.S. consumer confidence, said consumer spending will fall through the start of 2002.

The Russell 2000 index fell 7.27 to 397.60. 

Overseas, Japan's Nikkei stock average gained 2.0 percent. Stocks were weaker in Europe. Germany's DAX index lost 1.6 percent, the Britain's FT-SE 100 dropped 2.4 percent, and France's CAC-40 fell 1.8 percent.

Reuters and the Associated Press contributed to this report.