After rising about 40 points and falling 50 points, the Nasdaq composite index closed down 14.44 at 3,468.70, while the Standard & Poor's 500 index inched down 1.15 to 1,395.78.
The Dow rose 45.13 to 10,271.72, led by Honeywell International, which rose $3.94 to $49.94. General Electric agreed to buy Honeywell for about $48.4 billion in stock and assumed debt. GE fell $2.63 to $49.63.
The Nasdaq gained 5 percent last week, while the S&P climbed nearly 2 percent. The Dow was virtually unchanged with a rise of just 35 points.
Last week marked the first gains for the tech sector in six weeks, buoyed by a Nasdaq surge on Thursday of 247.04, or nearly 8 percent--the third-largest percentage gain in its history.
Some observers said those gains may represent the beginning of a broader turnaround for the Nasdaq. Solid earnings news from several large technology companies last week boosted confidence in the market.
"Most money managers can't afford to miss a big up move in the market," said Phil Dow, a market strategist at Dain Rauscher Wessels. Dow expected good earnings from optical-networking sector bellwethers such as Corning and JDS Uniphase.
Richard Peterson, a market strategist at Thomson Financial Securities Data agreed that an end-of-rally is possible, given that earnings season is nearing an end. Throughout September and early October, a slew of technology companies issued earnings warnings that caused investors to bail out of Apple, Intel and other marquee tech names.
"Most of the bad news is out already, and we shouldn't see any surprises to the downside," Peterson said. Investors will focus more on upcoming economic data releases for any signs of a Federal Reserve interest rate hike, he added.
The CNET tech index fell 6.44 to 2,733.07. Advancers led decliners, with 56 of the 97 stocks in the index rising and 41 falling.
Microsoft fell $3.06 to $62.13; Intel rose 25 cents to $43.31; Cisco Systems dropped $1.44 to $55.88; JDS Uniphase lost $1.19 to $101.19; and Corning fell $4.50 to $101.44.
Of the 18 sectors tracked by CNET Investor, PC software telecom equipment makers posted the sharpest drops, falling about 3 percent and 2 percent, respectively. Semiconductor equipment companies were the day's largest gainers, climbing 5 percent.
Shares of Lucent Technologies slipped lower Monday, falling 56 cents to $22.06. The telecommunications equipment maker ousted chairman and chief executive officer Rich McGinn on Monday, replacing him with former chairman Henry Schacht in what analysts are saying is a much-needed overhaul.
Lucent, which is expected to announce its earnings after the market closes Monday, also cut its fiscal first-quarter outlook, saying it expects revenue to decline about 7 percent and pro forma earnings to break even. Lucent was originally planning to announce earnings Tuesday.
Among members of the CNET tech index, Lexmark International posted strong gains.
Lexmark International rose $5.56, or nearly 19 percent, to $35.06 after the maker of inkjet and laser printers said it will cut 900 jobs and move some manufacturing to Mexico and China to reduce costs.
The company also announced that third-quarter net income fell 14 percent to $66.1 million, or 50 cents a share, from $76.5 million, or 56 cents a share, a year earlier. Sales rose 9.7 percent to $926.6 million from $845 million.
Ticketmaster Online-CitySearch rose $2, or about 16 percent, to $14.63. USA Networks said it may seek to merge its Ticketmaster unit and Ticketmaster Online-CitySearch, the affiliated Internet business USA Networks brought public in 1998.
STM Wireless gained $2.63, or about 51 percent, to $7.81. The provider of satellite-communications networks said in a press release distributed by Business Wire it won a patent for its new CDMA (code division multiple access) technology. The technology will reduce the cost of broadband communications via satellite.
The company didn't immediately return calls seeking confirmation.
Network Appliance fell $8.25, or about 6 percent, to $140.38 after Robertson Stephens downgraded the computer data storage equipment maker to "buy" from "strong buy."
The Philadelphia semiconductor index rose 24.39, or 3 percent, to 777.26, led by chip equipment makers Teradyne, which gained $2.31 to $30.50 and Novellus Systems, which climbed $3.06 to $42.