Analysts expect the market to pull back or make little progress ahead of a decision Wednesday on interest rates. Investors anticipate that the Federal Reserve's Open Market Committee will once again cut rates to stimulate the economy, and analysts say that expectation has largely been factored into higher stock prices.

"The market has been extended. ... You have some people saying, I am not going to wait for the (Fed's) news to come out, I'm just going to book profits now," said Richard A. Dickson, senior market strategist at Lowry's Research Reports in Palm Beach, Fla.

After tumbling as much as 162.46 points, the Dow ended today's session down 127.80, or 1.4 percent, at 9,072.95, according to preliminary calculations. The decline followed a weekly gain of 0.9 percent, the Dow's fourth consecutive winning week.

Entering the last week of the second quarter, the Dow is up 13.5 percent, making it the blue chips' best quarter since the fourth quarter of 1998, when it soared 17.1 percent.

The broader market also retreated today. The Nasdaq composite index dropped 33.90, or 2.1 percent, to 1,610.82, having risen 1.1 percent last week.

The Standard & Poor's 500 index fell 14.04, or 1.4 percent, to 981.65, having climbed 0.7 percent last week for its fourth straight weekly gain.

"What we have seen is a broadening out of (investors') appetite for equities, but only to a certain price. ... Now we see investors being more discriminating, said Joseph V. Battipaglia, chief investment officer at Ryan, Beck & Co. "That is what normally happens when you have such big moves higher."

Battipaglia added that he thinks the market's direction remains positive and investors' mood continues to be upbeat.

Today's losses were moderate compared with more than three months of strong rallies on Wall Street, spurred by surprisingly strong first-quarter earnings results and encouraging economic data. Even with the session's sell-off, the tech-focused Nasdaq is 26.7 percent above where it stood on March 11, the low point from which the rallies ensued.

Analysts said they were pleased to see the market give back some of its gains, having worried that stock prices were soaring out of control given the still difficult economic conditions.

"The market is being very healthy. Investors are looking at the prospect for earnings very rationally," Battipaglia said.

Among today's losers, hospital chain Tenet Healthcare dropped $4.22, or 26 percent, to $12.01 after warning that second-quarter earnings will be significantly below analysts' forecast calling for 34 cents a share.

Brokerage house downgrades contributed to today's losses.

JetBlue fell 94 cents to $38.01 after Bear Stearns downgraded it to "peer perform" from "outperform." R.J. Reynolds Tobacco declined 64 cents to $36.36 after Morgan Stanley cut its rating to "underweight" from "equal-weight."

News of a merger pushed Biogen, which also issued a profit warning, down $2.25 to $41.55 and IDEC Pharmaceuticals down $2.01 to $36.96. The two companies, both searching for cures for cancer and autoimmune disorders, announced plans to combine in a stock swap.

The companies said the deal would increase cash earnings per share by 15 percent upon closing and would save the new firm, to be called Biogen IDEC, $300 million in operating expenses through 2007.

Declining issues outnumbered advancers slightly more than 3 to 1 on the New York Stock Exchange. Volume was light.