Updated from 4:04 p.m. EST

Blue-chips ended lower Monday, but tech stocks finished higher, even as reports emerged that another car bomb has exploded in the Middle East, this one in Jerusalem.

The

Dow Jones Industrial Average closed with a loss of 41.24 points, or 0.4%, to 10,362.70, while the

Nasdaq gained 17.27 points, or 0.9%, at 1862.62. The

S&P 500 slipped less than a point to end at 1146.54.

Stocks slowly climbed above their worst levels throughout the afternoon. Before the latest Middle East violence, investors already seemed jittery about the escalation of tensions between Israelis and Palestinians in the region. A strong report on U.S. manufacturing activity did little to soothe investor worries, but on a positive note, the data do signal that the factory sector is strengthening.

The Institute for Supply Management said its

purchasing managers' index for March

rose to 55.6 from 54.7 in February. Economists expected the reading to remain essentially unchanged from the prior month. Any reading above 50 indicates expansion in the factory sector, and the March number marks the second straight month of growth after 18 months of contraction.

Decliners beat advancing issues on the

New York Stock Exchange and the Nasdaq. Oil-related stocks, chip stocks and gold shares were stronger, but banks, brokers, software stocks, retailers and homebuilders, among others, lost ground.

On the corporate front,

Nvidia

(NVDA) - Get Report

fell after a report suggested the company will have a difficult time meeting earnings and revenue estimates in coming quarters.

Barron's

quoted analysts who worried the graphics chip company is at the end of a cycle in which it had benefited from

Intel's

(INTC) - Get Report

tardiness with a key chipset. On Thursday,

RealMoney.com

columnist Herb Greenberg also questioned why second-quarter seasonality should be affecting a company like Nvidia. The shares traded as low as $40.56, but rebounded to end down only 73 cents at $43.63.

Adelphia

(ADLAC)

remained in the news and lost 12% to $13.12 after requesting additional time to file its annual report. The move comes one week after the company revealed that it had $2.3 billion in off-the-books loans.

In the telecom sector, analysts at Credit Suisse First Boston downgraded

Nokia

(NOK) - Get Report

to a buy rating from strong buy because of the slowdown in the wireless equipment industry. Shares of the mobile handset maker climbed 1% to $20.94. Elsewhere in the telecom universe, a consortium of banks backed out of a $300 million networking deal with

Global Crossing

, according to a report in

The Wall Street Journal

. The beleaguered telecommunications firm filed for Chapter 11 bankruptcy protection in January.

Xerox

(XRX) - Get Report

was up 3.1% to $11.08 after the company

agreed to pay a $10 million fine in an agreement with the

Securities and Exchange Commission

to settle alleged security law violations. The copier equipment manufacturer also plans to restate its financial results from 1997 to 2001. Xerox said the restatement could involve the reallocation of up to $2 billion in equipment sales revenue and "adjustments that could be in excess of $300 million" regarding certain reserves.

(For more corporate news, check out

TheStreet.com's

Stocks to Watch and

Market Movers items.)

U.S. Treasury notes and bonds were struggling along with equities. Around 4 p.m. EST, the 10-year note was off 8/32 at 95 26/32, yielding 5.43%. Shorter-term notes and the long bond were also dropping.

Overseas, most exchanges were closed, many of them for the Easter holiday. Japan's Nikkei did see trading, closing up a little more than 3 points to 11,029.