Optimism of a bull market faded Tuesday as investors sold stocks to preserve profits gained in the latest rally.

The technology-laced Nasdaq Composite Index lost 53.91 points, or 2.79 percent, to end at 1,880.51. The blue-chip Dow Jones industrial average lost 75.08 points, or 0.75 percent, to 9,901.38, while the broader Standard & Poor's 500 Index declined 8.40 points, or 0.73 percent, to 1,142.66.

Semiconductor stocks weighed on the market as traders cashed in profits after a 33-percent run-up in the sector over the past eight weeks.

The losses weren't surprising given the market's recent surge. Investors have been buying gradually since the precipitous selloff that followed the Sept. 11 terrorist attacks. Specifically, market watchers say Wall Street is feeling more optimistic about a business turnaround and the U.S. military victories in Afghanistan has helped restore investors' confidence.

Although the three major indexes have each made double-digit percentage advances in the last two months and have returned to their pre-attack levels, most analysts caution against too much exuberance. They note that much of the recent gain is a rebound from a catastrophic loss, rather than buying on healthy earnings.

"We're not making the call that this is a bull market yet until we have confirmation that stock prices are actually moving higher, rather than just recovering from the September lows," said Peter Gottlieb, portfolio manager at First Albany Asset Management.

Still, there are some encouraging signs. The Index of Leading Economic Indicators, released Tuesday, rose 0.3 percent in October. Wall Street had been expecting a flat report, but the report suggested that the economy might be stabilizing. That might make the Federal Reserve less inclined to cut interest rates for the 11th time this year at its next meeting, but analysts were still pleased.

Worries about light volume in the days ahead also weighed. Trading floors will be thinly staffed before the Thanksgiving holiday on Thursday. Investors often pare big positions ahead of a holiday because light trading activity makes buying or selling large amounts of stock more difficult without creating wild price fluctuations.

Semiconductor stocks tumbled. Intel Corp. and Applied Materials Inc. weighed on the market after an almost 30 percent gain in the sector over the past eight weeks.

Applied Materials lost $2.19 to $36.65, Intel slid $1.04 to $29.95, while KLA-Tencor fell $3.90 to $45.84.

The Philadelphia Semiconductor Index, the benchmark for the performance of semiconductor-related stocks, lost 5.8 percent, after rising 29.7 percent over the past eight weeks.

Oil stocks rose after Norway and Mexico oil ministers said they supported cuts in crude oil production to help boost sagging oil prices. Russia's reluctance to trim production has sent oil prices to two-year lows in the past week.

Oil exploration and production giant Exxon Mobil, gained 95 cents to $37.96. The Philadelphia Stock Exchange's oil index rose 3.5 percent.

Enron Corp. was the most active on the New York Stock Exchange and dropped $2.07 to $6.99. The oil and gas distribution and trading company, which has suffered after a series of financial missteps, warned it could be forced to pay $690 million in debt by next week, because of a credit downgrade.

Merger news helped drive some sectors. Royal Caribbean Cruises Ltd. jumped $1.09 to $16.10 on its planned merger with P&O Princess Cruises Plc, that would create the world's largest cruise group. P&O gained $2.85 to $20.95.

The latest earnings reports were dominated by retailers.

Women's apparel retailer Limited Inc. and its Intimate Brands Inc. lingerie retailing unit posted losses as a pinched economy exacerbated a dismal market. Limited slid 37 cents to $13.54, and Intimate Brands fell 43 cents to $13.83.

Declining issues narrowly led advancers on the New York Stock Exchange. Trading activity was moderate ahead of the Thanksgiving holiday. Volume came to 1.31 billion, compared with nearly 1.30 billion at the same point Monday.

The Russell 2000 index fell 3.81 to 453.90.

Overseas, Japan's Nikkei stock average fell 1.4 percent. In Europe, Germany's DAX index dropped 1.7 percent, Britain's FT-SE 100 slipped 0.7 percent, and France's CAC-40 lost 1.4 percent.

The Associated Press and Reuters contributed to this report.