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Downbeat Day for Stocks

The tech sector is unable to prop up the market as questions remain about the state of the economy.

Updated from 4:20 p.m. EDT

Stocks in the U.S. closed lower Monday as early optimism touched off by a series of tech upgrades faded following news of a nationwide auto workers strike at

General Motors

(GM) - Get Report

.

The

Dow Jones Industrial Average

was down 61.13 points, or 0.44%, at 13,759.06. The

S&P 500

was 8.02 points, or 0.53%, lower at 1517.73, and the

Nasdaq Composite

was down 3.27 points, or 0.12%, to 2667.95.

On the Dow, shares of GM pulled back after United Auto Workers members walked off the job at 11 a.m. EDT following the union's failure to get a labor agreement. GM had traded up roughly 5% earlier in the session, but its shares lost momentum and finished off 20 cents, or 0.6%, at $34.74.

Rival

Ford

(F) - Get Report

also made headlines after CEO Alan Mulally said North American operations could return to profitability in 2009 despite a weak forecast for the American auto industry. Shares were up 25 cents, or 3%, to $8.48.

On the bright side, tech shares finished higher thanks in part to

EMC

(EMC)

. Bear Stearns and Citigroup both upgraded the stock because of valuation. Citi also reiterated a buy on

Apple

(AAPL) - Get Report

and lifted its target by $25 to $185. Shares of EMC jumped 7.8% to $20.51, and Apple gained 2.9% to close at $148.28.

Elsewhere, RBC Capital Markets upgraded

Motorola

(MOT)

to outperform from sector perform, citing improvements in the company's handset unit. Motorola climbed 16 cents, or 0.9%, to $18.05.

Microsoft

(MSFT) - Get Report

rose 1.5% ahead of the launch of the video game

Halo 3

TheStreet Recommends

, a title that's expected to boost sales of the Xbox 360 console. Separately,

The Wall Street Journal

reported that the software giant is considering buying a stake in the social-networking site Facebook for $300 million to $500 million. Shares added 43 cents to $29.08.

Breadth was negative to start the week. On the

New York Stock Exchange

3.13 billion shares changed hands, as decliners topped advancers by a 5-to-3 margin. Volume on the Nasdaq reached 1.82 billion shares, with losers outpacing winners nearly 3 to 2.

U.S. equities had started the session with momentum carrying over from a strong finish Friday, when the Dow added 53.49 points, or 0.39%, to 13,820.19. The S&P 500 was up 7 points, or 0.46%, to 1525.75, and the Nasdaq was better by 16.93 points, or 0.64%, to 2671.22.

The indices notched their second winning week in a row, thanks to the

Federal Reserve's

50-basis-point interest rate cut last Tuesday. The Dow and the S&P 500 both climbed 2.8% for the week, and the Nasdaq added 2.7%.

"The market is very calm and is still digesting gains from last week," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "Traders are still grappling with recession vs. inflation, even after the Fed rate cut. Worries about the credit problem and a slowing economy cannot be erased overnight."

As the week progresses, investors will be getting another batch of economic data that they will use to guess how the Fed will act next. Although no releases were out Monday, reports on existing-home sales, new-home sales, durable-goods orders, second-quarter gross domestic product and others are due later this week.

Fed Chairman Ben Bernanke delivered a speech on education in Washington, but he made no mention of monetary policy. Richard Fisher, president of the Dallas Fed, said that the central bank can alter monetary policy in either direction if necessary and that recent trends in inflation and expectations provide "wiggle room" for adjustments.

Fed Governor Fred Mishkin will speak Thursday and Friday on globalization and monetary policy.

The earnings docket was relatively empty, but plenty of reports are due by week's end. Homebuilders

Lennar

(LEN) - Get Report

and

KB Home

(KBH) - Get Report

, along with

Bed Bath & Beyond

(BBBY) - Get Report

and

Paychex

(PAYX) - Get Report

, are set to release quarterly results during the next few sessions.

Away from stocks, Treasury prices were mixed. The 10-year note was flat in price, yielding 4.62%, while the 30-year bond added 4/32 to yield 4.88%. The dollar continued its free fall, hitting a new record low against the euro.

Marc Pado, U.S. market strategist with Cantor Fitzgerald, said that after the initial Fed-inspired rally, the market is worried about the repercussions of a weaker dollar.

"The dollar has been in a major decline since 2002 but broke to a new 15-year low on the Dollar Index on Friday," he said. "The euro traded over $1.40, the highest on record. Talk that the Saudis may move away from a dollar peg has many worried that we could see continued pressure on the dollar, and maybe even a move away from crude being priced in dollars."

Commodity prices were mixed. The front-month November crude contract lost 67 cents to close at $80.95 a barrel. Gold and silver futures inched higher on the day.

Overseas, Hong Kong's Hang Seng jumped 2.7%, and London's FTSE 100 added 0.1%. Germany's Xetra Dax slipped 0.1%.