Updated from 4:02 p.m. EDT

Investors threw in the towel on last week's rally as concerns about the economy and second-half earnings sent stocks plunging and brought the Dow's three-session loss to nearly 700 points.

The Dow closed down 270 points, or 3.2%, to 8044. The Nasdaq lost 42 points, or 3.4%, to 1206, and the S&P 500 fell 30 points, or 3.4%, at 834

After a spate of bad economic news last week, Monday's lone indicator, the Institute for Supply Management's services index , failed to reassure. The July index came in at 53.1, below the consensus estimate of 55.0.

Reports last week showed the economy created jobs at an anemic pace in July while overall growth in gross domestic product was sluggish in the second quarter.

After closing July with its strongest four-day showing since the Depression, the industrial average has now lost 693 points over three sessions while the Nasdaq has given up 122 points. Monday's selloff was steepest in technology shares, with the Philadelphia semiconductor index down 5.8%, and banks, with the Nasdaq financials index down 3.6%.

Decliners outpaced advancers 3-1 on the New York Stock Exchange and 5-3 on the Nasdaq, with the weakness being spread across a wide range of sectors. Volume was moderate at 1.4 billion on the NYSE and 1.3 billion on the Nasdaq.

Among specific issues, Citigroup ( C) and J.P. Morgan ( JPM) finished lower by 7% and 6%, respectively, after an analyst questioned their ability to grow profits in a tight operating environment.

Consumer products maker Procter & Gamble ( PG) said fourth-quarter earnings rose due to strong sales of its beauty and fabric care products. The company posted core earnings of 77 cents a share, 2 cents ahead of analysts' expectations. Shares slipped 2.7% to $87.44

Chipmaker Advanced Micro Devices ( AMD) advanced 3.6% at $7.57 after a published report in Barron's praised its next-generation microprocessor. Conversely, ESS Technologies ( ESST) was under heavy pressure after the magazine said that company faces stiffer competition in the DVD chip market. The stock fell 9.9% to $10.56

On the research front, Goldman Sachs lowered its investment rating on PayChex ( PAYX) to market perform from its recommended list, citing valuation concerns and the increased risk that declining interest rates could hurt profits. Goldman also cut its 2003 earnings forecast on PayChex. Its shares slipped 6.1% to $22.39

Elsewhere, JDS Uniphase ( JDSU) saw its shares tack on a penny to $2.37 after SoundView Technology upgraded the stock. Networking giant Cisco ( CSCO) was dropped 19.3% to $20.19 ahead of its earnings announcement Tuesday.

Cable television operator Cox Communications ( COX) plummeted $4.83, or 19.30%, to $20.19, after Credit Suisse First Boston downgraded the stock to hold from strong buy on concerns that accounting for subscriber turnover will hurt profit margins.

U.S. Treasury issues were higher. At about 4:45 p.m. The 10-year note was up 22/32nds to yield 4.21%. The long bond was up 28/32nds to yield 5.16%.

In Europe, London's FTSE 100 lost 1.9% to 3996, while Germany's Xetra DAX was lower by 5.7% at 3333. Japan's Nikkei 225 fell 0.1% to 9705, and Hong Kong's Hang Seng closed down 1.3% to 9862.