Putting an end to a three-day New Year rally, stocks slipped Monday as nagging concerns about earnings overshadowed upbeat outlooks from companies like technology giant Compaq.

The blue-chip Dow Jones industrial average dropped 62.69 points, or 0.6 percent, to 10,197.05, while the technology-laced Nasdaq Composite Index fell 22.25 points, or 1.08 percent, to 2,037.13. The S&P 500 Index eased 7.61 points, or 0.65 percent, to 1,164.90.

The stock market's blazing rally from three-year lows, which were hit last autumn after the Sept. 11 attacks, has raised worries stock prices have outpaced earnings expectations. Analysts expect an economic rebound in 2002, but they are still girding for a bleak fourth-quarter earnings season.

"The market had a very powerful move in the first three days of the year," said Robert Stovall, analyst at Prudential Securities, adding that if the Dow Jones industrial average kept up its early gains throughout the year, it would reach 30,000 by year-end -- an impossible goal. "The enthusiasm of last week can't continue."

Compaq, the No. 2 personal computer maker, rose after forecasting a quarterly profit on revenue of $8 billion rather than the loss seen earlier by the company, indicating the struggling PC industry experienced surprising holiday demand.

Compaq rose 29 cents to $11.68 and ranked as one of the most heavily traded stocks on the New York Stock Exchange.

Circuit City Stores Inc., the No. 2 U.S. consumer electronics retailer, rallied $2.29 to $29.75. The company reported strong December sales and said fourth-quarter earnings would surpass the consensus Wall Street estimate.

News of Circuit City's strong holiday sales pushed up shares of rival electronic store chains like Best Buy Co. , which hit a 52-week high of $76.60 but ended little changed at $73.84. RadioShack Corp. also rose, up $1.29 to $30.92.

Telecommunications equipment maker Lucent Technologies Inc. slipped 15 cents to $6.95 and was the most heavily traded issue on the Big Board. The company named Eastman Kodak Co.'s president and chief operating officer, Patricia Russo, as chief executive, bringing back a former executive to complete its turnaround. Eastman Kodak, a Dow component, fell 95 cents to $27.94.

Soft drink giant Coca-Cola Co. dropped after a Wall Street house downgraded the Dow member, saying expectations are too high in the sluggish economy. Coca-Cola slumped $1.21 to $45.22.

"We definitely have had a good move up since the bottom of September," said Noah Blackstein, a portfolio manager at Dynamic Power American Fund, which oversees $230 million. "What people are waiting for now is whether earnings will substantiate the price moves."

ImClone Systems Inc. tumbled $7.66 or more than 17 percent, to $35.83. Regulators said they would not accept the biotechnology company's application to sell its eagerly awaited colon cancer drug, Erbitux.

Vignette Corp., maker of software that enables companies to manage their Web sites, sank $1.45 to $4.02. The company expects quarterly revenues to be far below its previous guidance amid a continued reluctance by large corporations to spend heavily on technology.

In economic news, Federal Reserve Bank of Atlanta President Jack Guynn said a rebound in economic growth might not arrive for another six months, in contrast to more optimistic private economists who say a recovery is already under way.

But Guynn also said the Federal Reserve -- even after 11 interest rate cuts last year -- has room to reduce rates further. He said there were "hints" the economy was stabilizing but it was too early to say it had turned the corner.

The possibility of more earnings warnings ahead of the official earnings season, which begins in mid-January, added to a cautious mood. So far, however, the less negative tone of profit forecasts has boosted sentiment and helped spark a three-week rally in the broad Standard & Poor's 500.

Of the 1,217 early profit announcements so far, 25 percent have been positive. That's more than the 16 percent average in the first three quarters of 2001, according to Thomson Financial/First Call.

Still, some analysts worry fourth-quarter earnings warnings could dampen investors' enthusiasm.

"The only people who are going to tell us anything about the fourth quarter are those who are going to disappoint," Vogelzang said. "People who have good news to tell aren't going to tell it."

Declining issues narrowly led advancers on the New York Stock Exchange. Volume came to 1.29 billion shares, compared with 1.51 billion at the same point Friday.

The Russell 2000 index dropped 6.11 to 493.19.

Overseas, Japan's Nikkei stock average rose 0.7 percent. In Europe, Germany's DAX index lost 1.5 percent, Britain's FT-SE 100 was down 0.6 percent, and France's CAC-40 slipped 1.4 percent.

Reuters and the Associated Press contributed to this report.