Updated from 4:01 p.m. EDT

Stocks weakened substantially late in the day, and the major equities averages closed near their lows of the session. The

Dow Jones Industrial Average finished with a loss of 198.59 points, or 2%, to 9808.04. The

Nasdaq dropped 34.55 points, or 2.1%, to 1578.48, and the

S&P 500 slid 20.76 points, or 1.9%, to 1052.67.

Wall Street will receive more clues about the strength of the economy when the

Federal Open Market Committee, the

Fed's policymaking arm, meets in Washington on Tuesday.

Analysts don't expect the central bankers to change the

federal funds target rate, but they might provide observers with a better idea of when rates could change. The fed funds rate currently stands at 1.75%.

With the bulk of first-quarter earnings behind them, investors could focus on weekend words from

Berkshire Hathaway

(BRK.A) - Get Report

skipper Warren Buffett. Among other things, Buffett said he expects a nuclear attack on U.S. soil at some point in the future, with New York and Washington the likely targets.

Those troublesome comments, made in the context of how the future risks of terrorism relate to the insurance industry, weren't the only statements Buffett made during the

Berkshire annual meeting over the weekend. The billionaire investor also lashed out at

Enron

, greedy Wall Streeters and asbestos claims. Additionally, he called his firm's investments in

Moody's

(MCO) - Get Report

and

H&R Block

(HRB) - Get Report

"no brainers," which helped lift shares of both companies.

With the pace of earnings reports slowing dramatically, the accounting worries that surfaced earlier this year are gradually creeping back into the picture.

Peregrine Systems

(PRGN)

, the latest company with

bookkeeping problems, had an especially rough day.

The stock tanked 65% to 89 cents after the company said it plans to launch an internal investigation of its accounting records to weed out potential inaccuracies. KPMG, hired in April to replace Arthur Andersen as its independent auditor, discovered the accounting problems in its audit of Peregrine's books. The company also said that CEO Steve Gardner and Chief Financial Officer Matt Glass have resigned.

Separately,

El Paso

(EP)

, a natural gas supplier, said on Friday that it overstated cash flow and working capital numbers that had been offered on a conference call with analysts the day before. As a result, the company's shares fell 3.8% to $35.16.

The most active issue on the

New York Stock Exchange and also one of the biggest losers was

Tyco

(TYC)

, whose shares lost more than 10% to $19.35.

Design software maker

Autodesk

(ADSK) - Get Report

was also under pressure, falling 19% to $14.07 after the company

lowered its guidance for the first quarter. Meanwhile,

Intel

(INTC) - Get Report

, the world's largest chipmaker, reaffirmed the outlook that its second-quarter revenue would be flat, despite signs the U.S. economy is on the mend. Intel's chief executive, Craig Barrett, made the statement to reporters in Taiwan. Shares of Intel lost 2.9% to $25.78.

Elsewhere,

BMC Software

(BMC)

said its quarterly profits fell amid a continued slowdown in IT spending, but the results topped analysts' forecasts by a penny. The company posted fourth-quarter earnings, excluding items, of $29.6 million, or 12 cents a share. BMC also projected first-quarter earnings of 7 cents to 9 cents a share and a fiscal 2003 profit of 46 cents to 52 cents a share. Shares were up 2.2% to $15.

Another company reporting earnings,

Alltrista

(ALC) - Get Report

, said first-quarter profits rose as efforts to cut costs proved to be successful. The company, a maker of food preservation products and systems, earned $1.05 a share in the latest quarter, including a tax benefit. Before the gain, Alltrista earned 26 cents. The company also set plans for a 2-for-1 stock split. Alltrista rose 2.9% to $37.10, reaching a 52-week high.

On the research front, SoundView Technology lowered its investment rating on

Nokia

(NOK) - Get Report

to buy from strong buy, sending shares of the cell phone maker down 3.4% to $14.90

Shares of networking giant

Cisco

(CSCO) - Get Report

fell 1.9% to $12.89, one day before the company is scheduled to issue its quarterly profit report. Analysts are expecting the company to post third-quarter earnings of 9 cents a share on revenue of $4.87 billion.

U.S. Treasury issues were lower. Around 4 p.m. EDT, the 10-year note was down 3/32 to 98 17/32, yielding 5.07%. The long bond was the weakest issue.