A series of negative factors piled on to discourage buyers — until prices fell so low that some investors decided to place a few bets.

Worries about interest rates, inflation, the situation in Iraq and uncertainty about what impact it might have on the presidential race, and the psychological impact of seeing the Dow Jones industrial average drop well below 10,000 made for an "ugly" day on the market, said Bill Groenveld, head trader for vFinance Investments.

"Why should the buyers step up here now?" asked Groenveld. "Why try to catch a falling knife? They have much more room to push down. And I don’t see as many fund managers or institutional investors being pro-active in a rising rate environment. ... Everybody is in a really reactive stage right now."

According to preliminary results, the tech-dominated Nasdaq composite index fell 5.76, or 0.3 percent, to 1,925.59, after advancing nearly 2 percent yesterday. Still, the index closed well off its lows, having declined more than 2.5 percent earlier in the day.

The other gauges ended fractionally higher, having bounced back from steep declines. The Dow added 25.69, or 0.3 percent, to 10,045.16, coming back from a loss of 167.28. The Standard & Poor’s 500 index ended up 1.81, or 0.2 percent, at 1,097.26.

Although the major indexes had mostly recovered by the end of the session, low volume suggests many large investors are staying out of the market. At least some may be awaiting key inflation data due — the producer and consumer price indexes — later this week.

Investors once again ignored upbeat earnings news, this time from Cisco Systems Inc., and a bright forecast from Qualcomm Inc.

This lack of enthusiasm is part of a worrisome pattern that goes back several weeks, even months, said Ken Tower, chief market strategist for Schwab’s CyberTrader.

"Traders and investors aren’t convinced things get better from here, that’s why the market goes down when good news comes out," Tower said.

"It’s as if people are saying, ’OK, you’ve given me good news, but what’s next?"’

Meanwhile, the U.S. trade deficit swelled to an all-time high of $46 billion in March, reflecting a growing appetite for foreign-made goods. Sales of U.S. goods to other countries also climbed to their highest level on record — an encouraging signal for domestic manufacturers and exporters.

Trade and the migration of U.S. jobs overseas have become major issues for the stock market. Fuel prices have also emerged as a concern, with oil trading at 13-year highs, solidly above $40 a barrel.

It all adds up to a bearish outlook for the months ahead, said Gary Kaltbaum, president of Kaltbaum & Associates, a money management firm in Orlando, Fla.

"Earnings are good, yes, but the market doesn’t care about that. It’s forecasting what’s going on down the road," Kaltbaum said. "The market is anticipating a slowdown on higher rates and rising oil prices ... add to that high valuations in the tech space, and I think you have the perfect storm to go lower."

Cisco Systems closed down 29 cents at $21.96, despite a jump in quarterly profits as governments and businesses ratcheted up their capital spending equipment. The world’s largest network equipment maker said it added 200 jobs during the quarter, and plans to add another 1,000 positions by the end of the year.

Qualcomm shed 82 cents to $63.90, although it raised its forecast for the quarter and the year on improved orders for its mobile phone chips.

General Electric Co. finished 15 cents higher at $30.40 after its NBC unit closed its acquisition of Vivendi Universal’s entertainment business.

Also among the gainers, Principal Financial Group Inc. was up $2.40 at $34.73 after announcing the sale of its mortgage banking business to Citigroup in deal worth $1.26 billion. Citigroup ended up 62 cents at $46.31.

Advancing issues slightly outnumbered decliners on the New York Stock Exchange.