NEW YORK (CNNfn) - The Nasdaq composite index fell for the third time in three sessions Tuesday as investors continued fretting that technology stock prices still don't reflect forecasts for slowing profit growth.
The losses, a turnaround from earlier gains, pushed the index to its lowest levels in a month. Tuesday's late decline defied forecasts made just hours earlier that the worst may be over for the Nasdaq -- September's worst-performing major U.S. stock index.
 "All of a sudden, I guess people woke up and said, 'These stocks are overvalued,'" said Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin.
The selling comes after the latest company, PRI Automation, readied Wall Street for sharply lower financial results in the current quarter.
"What we have now is an economy that's slowing down," Ned Riley, chief investment strategist at State Street Global Advisors, told CNN's Street Sweep. "I think we're going to see some cyclicality to tech earnings."
Still, investors found some places to hide. The Dow Jones industrial average rose on a surge in J.P. Morgan, which jumped on the latest buy-out rumor, and a recovery in IBM.
The Nasdaq fell 46.84, or more than 1 percent, to 3,849.51 -- the lowest close since Aug. 11, when the Nasdaq finished at 3,786.47. Cisco Systems, whose gains in March where a kind of proxy for the Nasdaq's former high-flying ways, fell below $60 for the first time since May. But the Dow added 37.74 to 11,233.23. The S&P 500 shed 5.86 to 1,481.99.
 More stocks fell than rose. Declining issues on the New York Stock Exchange outpaced advancing ones 1,414 to 1,357, as more than 980 million shares changed hands. Nasdaq losers beat winners 2,224 to 1,790, as more than 1.5 billion shares changed hands.
In other markets, the euro held steady near a lifetime low against the dollar, while the U.S. currency rose versus the yen. Treasury securities were mixed.
Techs falter
The Nasdaq, which surged in August, begins Wednesday's trading session down more than 8 percent in September.
Among Tuesday's losers, Sun Microsystems (SUNW: Research, Estimates) fell 94 cents to $114.31, Cisco Systems (CSCO: Research, Estimates) dropped $2.31 to $58.88, and Oracle (ORCL: Research, Estimates) lost $4.06 to $79.38.
State Street's Riley said the Nasdaq stock market's top 15 stocks in terms of market value trade at an average of 110-times earnings and are expected to grow profits by 30 percent on average -- making them vulnerable to the slightest negative news.
 "Any (profit) short-fall in that growth rate at 110 times earnings means there's some risk in these stocks," Riley said.
The day's losses come as two other negatives confront stock investors. Oil prices have been climbing, sparking fears that a rise in the commodity's cost will stunt economic growth. At the same time, the euro has been sinking. The profitability of American companies doing business in Europe can come up short when earnings in euros are converted to dollars. Just Monday, Goldman Sachs downgraded IBM, citing the negative effects of the weak euro.
IBM's (IBM: Research, Estimates) rose 50 cents to $125, reversing some of Monday's decline.
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At the same time, companies are entering a period of informing analysts about results for the July-September quarter. At least 15 firms prepared analysts for weaker-than-expected earnings last week, sending stocks lower. More such warnings may come.
"This is the period when you get the maximum number of (pre-) earnings surprises," said Mark Klee, who manages John Hancock's Global Technology Fund. "There will be more before it's over."
Looking ahead, Klee sees a choppy remainder of September -- a historically tough month for stock performance in general and the technology business cycle in particular.
In the latest warning, PRI Automation (PRIA: Research, Estimates) said fiscal fourth-quarter income is expected to be flat -- well below the 52-cent-a-share profit forecast by analysts. The chip equipment supplier tumbled $16.81 to $25.88. A series of brokerage downgrades followed.
 J.P. Morgan (JPM: Research, Estimates), which ran up in recent weeks on merger speculation, continued to do so Tuesday. Morgan climbed nearly $8 to $177.75 in regular hours trading. But the stock surged as high as $187.25 in after-hours trading after The New York Times said on its Web site that Chase Manhattan Bank (CNB: Research, Estimates) is in talks to buy Morgan. If true, the deal would end weeks of guessing which financial institution would snap up one of Wall Street's oldest banks.
Limiting the Dow's gains, Hewlett-Packard (HWP: Research, Estimates) shed $1.44 to $112.56, falling for a second day. The computer and printer maker said Monday it may buy PriceWaterhouseCooper's consulting business for $18 billion. As a result of the possible purchase, rating agency Standard & Poor's said Tuesday it may downgrade HP's debt. 
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