NEW YORK – Stocks drifted lower on Monday as the second-quarter "confessional season," when companies admit their results will miss Wall Street's expectations, picked up steam, scaring investors away.
The Dow Jones industrial average lost 54.91 points to close at 10,922.09, and the Nasdaq composite index fell 44.29 points, or 2.00 percent, to end the day at 2,170.81. The broader Standard & Poor's 500 index fell 10.58 points at 1,254.38.
Nasdaq was dragged lower by marquee names including Cisco Systems Inc., the Web gear giant, its rival Juniper Networks, and No. 1 computer chip maker Intel Corp.
The market, which had a big rally in April and early May, has been giving back some of its gains and experiencing lighter volume since late last month as investors await signs that the economy is recovering, benefitting from the five interest rate cuts made this year by the Federal Reserve.
In the near term, analysts say investors see little reason to buy because upcoming second-quarter earnings will be quite weak and third-quarter results likely will be even worse. With no positive news to inspire them, investors have reduced their commitment to the stock market and kept trading volume light.
``Everybody is kind of sitting around now waiting for the good news,'' said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.
Investors still fretted over a warning late last week from Juniper that quarterly results would fall short of Wall Street expectations due to slow orders from telecom companies.
Its stock fell $2.69 to $35.33 in what traders said was a hangover from a severe bout of selling on Friday that hit the stock in the wake of the company's warning on results. Wall Street houses Credit Suisse First Boston and Robertson Stephens cut earnings estimates for Juniper on Monday.
So far a total of 459 companies have warned their quarterly results will not meet expectations for the second quarter, far more than the 75 companies that had warned a year ago at this time, according to market tracking firm Thomson Financial.
Of the warnings so far, 168 warnings, or 37 percent, have been from tech-related firms.
Varian Semiconductor, which makes tools used in the production of microchips, lost $3.22 to $39.25 after warning quarterly revenues would miss earlier expectations due to weakness in the chip industry. Varian also said it has cut 20 percent of its work force since Jan. 1.
DuPont Photomasks Inc., another semiconductor equipment maker, slumped $6.03 to $45.97 after it said results will fall far short of expectations and that it will cut about 6 percent of its staff.
The Philadelphia Stock Exchange semiconductor index lost 3.36 percent amid losses by leading chip equipment maker Applied Materials, off $1.65 to $53.62. Intel declined 34 cents to $30.33, weighing on both the Nasdaq and the Dow.
Neiman Marcus, the high-end department store operator, lost 56 cents to $33.74 after it warned it will post a quarterly loss and full-year earnings below estimates because of lower revenues and steep markdowns on merchandise.
Shares of Nortel Networks Corp. sank 49 cents to $12.04, and at one point hit a new 52-week low at $11.83, after UBS Warburg cut its earnings estimates and price target for the telecoms equipment supplier, arguing that sales going forward will be even lower due to weak demand.
Dow stock General Electric Co. shed 74 cents to $47.40. The European Commission is reviewing a GE offer to triple its divestitures in a bid to win approval for the acquisition of Honeywell International Inc., sources said. Honeywell lost $1.26 to $45.25.
Financial services firm American Express Co. edged up 42 cents to $41.41, boosting the Dow. Wall Street firm Morgan Stanley, which dropped $2.34 to $62.25, has approached the credit-card giant about a possible merger, according to financial weekly Barron's .
Declining issues outnumbered advancers about 3 to 2 on the New York Stock Exchange where volume came to 853.24 million shares, compared with 721.68 million on Friday, when a computer glitch forced the NYSE to suspend trading in the morning for about 90 minutes.
The Russell 2000 index, the barometer of smaller company stocks, fell 4.71 to 506.93.
Overseas markets were lower Monday. Japan's Nikkei stock average and Britain's FT-SE 100 each fell 1.5 percent, while Germany's DAX index and France's CAC-40 both declined 0.4 percent.
-- Reuters and the Associated Press contributed to this report.