Analysts said many investors also were looking to cash in gains following the recent three-day rally, which lifted the Dow Jones industrial average nearly

432 points, its best ever performance for the first three trading days of a new year.

"Gateway and Alcoa's earnings were disappointing, so that's leaning on the market," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. "But mostly, you're getting some normal profit-taking."

The Dow fell 145.28, or 1.7 percent, to close at 8,595.31, according to preliminary calculations. It was blue chips' biggest decline since Dec. 9, when the Dow fell 172 points.

The broader market also finished lower. The Nasdaq composite index dropped 30.48, or 2.1 percent, to 1,401.09. The Standard & Poor's 500 index declined 12.99, or 1.4 percent, to 909.94.

Alcoa slid $2.53, or 10.4 percent, to $21.85 after the aluminum maker reported a fourth-quarter loss wider than analysts' estimates.

Gateway fell 21 cents to $2.96 after the computer maker warned fourth-quarter losses would be larger than expected, citing disappointing holiday sales.

Analysts say today's trading showed that investors remain wary about the economic outlook, particularly as they wait for companies to report profits in the coming weeks.

But they say investors are still looking for better prospects for 2003, particularly after President Bush proposed yesterday to slash taxes by $674 billion over 10 years. The plan includes the elimination of the federal tax investors pay on stock dividends.

"I think investors' spirits will continue to improve," Goldman said. "It's not going to be up, up and away. We will have some pauses to refresh. But I think the market will be higher at the end of January than it is right now."

Todd Clark, head of listed equity trading at Wells Fargo Securities, agreed, calling today's declines "a healthy consolidation."

Looking ahead, "the key is going to be Friday's unemployment report," he added. "That's the big number to set the pace for the next trading days and the next month. The market is looking for stability in the labor markets."

Bank of New York dropped $1.04 to $25.50 after saying it was buying Credit Suisse First Boston's Pershing stock-clearing unit for $2 billion in cash and other considerations.

Telecommunications shares also took a hit. BellSouth fell $1.27 to $27.65 and Verizon dropped $2.32 to $40.91 after UBS Warburg downgraded shares of the two companies.

Gainers included Marvel Enterprises, which rose 65 cents to $10.80, after the comic book publisher raised its 2002 performance target.

Declining issues outnumbered advancers 9 to 5 on the New York Stock Exchange. Volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, fell 4.88, or 1.2 percent, to 389.07.