A string of profit warnings from semiconductor companies have worried the equity markets for more than a week, and the picture only looked bleaker after chip bellwether Intel released its results late yesterday. The market's tone seemed to temporarily improve following McDonald's midday announcement, but the advance was short-lived. Still, analysts remained optimistic.

"Despite all the worries, I think the earnings numbers will be spectacular," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "Investors should not get discouraged because of the results of one company."

According to preliminary results, the Dow Jones industrial average dipped 38.79, or 0.4 percent, to 10,208.80.

The broader gauges also finished lower. The Nasdaq composite index shed 16.78, or 0.9 percent, to 1,914.88. The Standard & Poor's 500 index was down 3.67, or 0.3 percent, at 1,111.47.

In addition to the negative sentiment surrounding earnings, a discouraging report on retail sales also held buyers back. Sales at retailers fell 1.1 percent in June, the sharpest decline in 16 months, the Commerce Department said. Economists blamed bad weather, higher energy prices and slower payroll growth. The pullback followed a 1.4 percent rise in May.

Many market participants had hoped second-quarter results would help stocks break out of the tight trading range they've been mired in, but a steady march of earnings disappointments and profit warnings have dampened investor enthusiasm. Even so, the news has been mostly good so far.

But for investors already distracted by inflation, Iraq and the upcoming election, anything less than stellar seems like an upset.

The weaker retail numbers for June, and anxiety over whether they portend a broader trend of slowing job growth and dwindling consumer confidence, added to the queasiness today.

Intel sank $2.76, or 11 percent, to $23.38, after the chip-maker said 2004 profit margins would be lower than expected as it works through a buildup of inventory.

The outlook led several brokerage firms to downgrade the company, even though it matched earnings estimates and reported a surge in revenue on robust demand for cell phone memory chips.

McDonald's gained $1.11 to $27.79 after the fast food chain said June sales growth at its restaurants around the world would help it beat Wall Street's earnings estimates for the second quarter.