Updated from 4:09 p.m. EST

Stocks fell hard Monday, led to the downside by the tech sector, as traders took a wait-and-see stance heading in to the busiest part of earnings season.

The Dow Jones Industrial Average was off 88.37 points, or 0.7%, at 12,477.16, bringing the index close to the unchanged mark for the year. The S&P 500 was down 7.55 points, or 0.53%, at 1422.95. The Nasdaq Composite was lower by 20.24 points, or 0.83%, at 2431.07.

"There's a lot of nervousness over earnings and the interest rate environment," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "January hasn't been a great month so far. We're in the heart of the earnings calendar, and we're seeing people taking their profits."

On the Dow, Boeing ( BA) slid 3.4% after Wachovia downgraded the airplane maker to market-perform from outperform.

Meanwhile, losses of 1.9% or more in Apple ( AAPL), Dell ( DELL) and XM Satellite Radio ( XMSR) dragged the Nasdaq lower.

Roughly 2.30 billion shares changed hands on the New York Stock Exchange. Decliners beat advancers by a 5-to-3 margin. Volume on the Nasdaq topped 1.96 billion shares, with losers outpacing winners 2 to 1.

Marc Pado, U.S. market strategist with Cantor Fitzgerald, said earnings will be at the forefront of investors' minds as the week unfolds.

"Even when the earnings have been better than expected, the forward-looking statements have left something to be desired," he said. "These earnings are not only necessary to justify the current market at record highs, but the corporate outlook is setting the tone for the first quarter."

Aside from earnings, the market also has been closely following oil prices, which have been sliding since the beginning of the year. In the latest Nymex trading session, energy prices jumped as high as $53.44 before giving back gains.

The February crude contract, trading for the last time, lost 86 cents at $51.13 a barrel. Natural gas, meanwhile, surged 43 cents to close at $7.32 per million British thermal units.

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