Updated from 4:46 p.m. EST

Tech stocks led the broader market lower Monday as nervous investors continued their monthlong migration from the

Nasdaq

.

The Nasdaq Composite -- whose gain was roughly twice that of its blue-chip counterparts in 2003 -- shed 30 points, or 1.5%, to 2008, leaving it about 5 points above its Dec. 31 close. The

Dow Jones Industrial Average

fell 9 points, or 0.9%, to 10,610, while the

S&P 500

fell 3 points, or 0.3%, to 1141.

Weakness in the Nasdaq, which went as high as 2152 in mid-January, reflected fairly heavy selling among semiconductor shares. The Philadelphia Semiconductor Index lost 2.7%, partly because of weakness in

Intel

(INTC) - Get Report

, which said in a regulatory filing that its could owe $600 million in back taxes amid an IRS audit. Intel lost $1, or 3.3%, to $29.

Internet shares were also down, led by

Amazon

(AMZN) - Get Report

, which continued the slow slide that began when it reported at the end of last month. The shares fell $1.20, or 2.7%, to $43.970. That's down from $55.74 on Jan. 27.

Amazon's slide has coincided with the swoon in the Nasdaq, which touched 2152 the day Amazon reported. That high also came one day before the

Federal Reserve's

policymaking arm dropped its vow to keep interest rates low for a "considerable period," an announcement that has had less of an impact on blue-chips.

"The market's just coming to grips with the fact that the Fed is going to have to raise rates at some point," said Bryan Piskorowski, a market analyst at Wachovia Securities. "Valuations have clearly gotten stretched."

While a correction is underway, Piskerowski said investors shouldn't abandon their allocation to technology stocks.

"I don't think tech is in any kind of great risk as far as seeing massive underperformance versus the S&P. But when you look at relative strength, you can see there have been some warning signs for the past few weeks," he said. "What you have on your hands is some rotation here. We still like materials and industrials as ways to continue top play and have leverage to a recovering economy both here and abroad, but tech just looks a little bit expensive here and I think the Street's done a really good job of coming to grips with that."

Overseas, London's FTSE edged up 0.4% to 4,533, and Germany's Xetra DAX rose 0.3% to 4,084. In Asia, Japan's Nikkei closed up 1.4% to 10,869, while the Hang Seng in Hong Kong fell 0.7% to finish at 13,765.

The yen rose against the dollar after its biggest weekly slide in five years. The gain followed a government report showing that Japanese exports increased for a third straight month in January. The dollar was buying 108.37 yen in New York, compared with 108.84 at Friday's closing bell. The euro was buying $1.2553, compared with $1.2563 at the end of last week.

The 10-year note rose 14/32 to yield 4.04%.

In corporate news,

Lowe's

(LOW) - Get Report

fourth-quarter earnings rose 28% from a year earlier on a 7.3% jump in same-store sales. The home-improvement chain also said first-quarter results will beat analyst estimates. Its stock was fell $1.71, or 2.9%, to $56.67.

In the tech sector, Qualcomm raised its outlook for second-quarter earnings to a range of 48 to 50 cents a share for the quarter, up from its previous guidance of 38 to 41 cents a share. Its stock rose $3.03, or 5.1%, to $62.43.

Citigroup

(C) - Get Report

outbid

Standard Chartered PLC

to buy

KorAm Bank

, fueling talk to more merger activity in the banking sector. The world's largest financial services group said it expects the deal to add to 2004 earnings. Shares of Citigroup closed up 43 cents, or 0.9% to $49.32.

Shares of

Boeing

(BA) - Get Report

and

United Technologies

plunged on reports that the Pentagon will shelve its Comanche attack helicopter program, a joint venture between the two companies. Boeing shares fell 72 cents, or 1.62%, to $43.62, while shares of United Technologies dropped $2.82, or 2.9%, to $93.80.

On Tuesday, the Conference Board will release February's Consumer Confidence number. The projected reading of 93, lowered from January's 96.8, would echo the drop reported in a preliminary release of the University of Michigan's Consumer Sentiment Index.

Earnings reports are also due out Tuesday from

Federated Department Stores

(FD)

and

Home Depot

(HD) - Get Report

. Analysts predict Federated's earnings to come in at $2.26 a share, compared to last year's $3.38, according to a poll taken by Thomson One Analytics. Home Depot's earnings are projected to be 39 cents a share, compared to last year's 27 cents a share.