NEW YORK (CNN/Money) - U.S. stocks tumbled to six-week lows Thursday after quarterly numbers from General Electric and Yahoo! spooked investors banking on a rebound in corporate profits.

In a session of broad declines, reports of a government inquiry pushed IBM shares below their close on Sept. 21, when the major indexes fell to three-year lows following the terrorist attacks.

The Dow Jones industrial average tumbled 205.65 points, or 2 percent, to 10,176.08. Its lowest finish since Feb. 28 narrowed the Dow's 2002 gain to 1.5 percent. The Nasdaq composite index lost 41.83, or 2.4 percent, to 1,725.24, widening its year-to-date loss to 11.5 percent for its lowest close since Feb. 22. Down 4 percent on the year, the Standard & Poor's 500 index declined 26.78, or 2.4 percent, to 1,103.69.

GE, the world's largest company by market value, posted first-quarter sales that fell short of forecasts. Yahoo! fell 16 percent after recording its sixth straight quarterly net loss. And IBM fell nearly 6 percent during a week when the No. 1 technology company by sales warned about earnings.

"It's a reminder of the lack of confidence in these big names," said Jordan Kimmel, portfolio manager at Magnet Management. "It's stemming from [investors asking], 'Do I own the next Enron?' "

Above its post-Sept. 11 lows, the market nonetheless is back to where it was in February, before signs of a stabilizing economy sent stocks higher.

Kimmel, who links some of the nervousness to the ways big, acquisitive companies account for their purchases, notes that small companies, whose moves don't show up in the major indexes, have outperformed this year.

"There continues to be more value and opportunity there," said Kimmel, who likes Net Bank (NTBK: up $0.18 to $16.95, Research, Estimates) and Tyson Foods (TSN: down $0.46 to $13.48, Research, Estimates).

The Russell 2000 index of small stocks is up 3 percent this year.

More stocks fell than rose. On the New York Stock Exchange, declining stocks topped advancing ones 2-to-1 as 1.5 billion shares changed hands. Nasdaq losers topped winners nearly 2-to-1 as 1.7 billion shares traded.

In other markets, investors fled stocks for the relative safety of Treasury securities, pushing yields lower. The dollar rose against the yen and slipped versus the euro.

Thursday's decline erased all of the big gains from Wednesday. It also keeps the market stuck within a six-month range as investors, encouraged by signs of economic stability, have gleaned only scattered evidence that corporate profits are improving.

General Electric (GE: down $3.45 to $33.75, Research, Estimates) earned first-quarter profit of 35 cents a share, matching forecasts on nearly flat sales of $30.5 billion. That was below analysts' forecasts of $32.6 billion.

Yahoo! (YHOO: down $2.99 to $15.45, Research, Estimates) posted an operating profit of 2 cents a share in the first quarter, but the Internet portal lost money including charges for the sixth straight quarter. Calling the results "unspectacular," Merrill Lynch downgraded the stock, saying its price may be expensive relative to its growth prospects.

Yahoo! also was the subject of a front page New York Times story detailing its plan to sell users' personal e-mail addresses and telephone numbers as it faces sluggish advertising sales.

The Dow's biggest loser, IBM (IBM: down $4.82 to $84.19, Research, Estimates), resumed its slide from Monday when the company cut profit targets. A newsletter, SEC Insight, reported that the Securities and Exchange Commission began an inquiry into IBM on Feb. 15, the same day a New York Times story raised questions about how IBM accounted for the sale its fiber-optic business.

Questions about the accuracy of financial results have dogged the markets since Enron last year restated its results before going bankrupt. Profit concerns have done the same. Verizon Communications (VZ: down $2.08 to $41.82, Research, Estimates) and Nortel Networks (NT: down $0.14 to $3.36, Research, Estimates) joined IBM this week in pre-announcing shortfalls.

"Tech and telecom are undergoing a substantial re-evaluation in the marketplace," Ben Hock, senior investment officer at AIM Management Group, told CNNfn's Market Call.

The session's losses were broad, spreading to technology stocks such as Microsoft, (MSFT: down $1.51 to $54.79, Research, Estimates) drugmakers including Merck (MRK: down $0.99 to $52.15, Research, Estimates), and financials like Citigroup (C: down $1.87 to $46.76, Research, Estimates).

Wal-Mart Stores (WMT: down $0.40 to $60.17, Research, Estimates) pared an earlier gain. The world's biggest company by revenue said sales at stores open at least a year rose 9.5 percent in March. The news came a day after another retailer, Sears Roebuck (S: down $0.94 to $53.24, Research, Estimates), said March quarter profit surged past forecasts.

Only two Dow stocks, Philip Morris (MO: up $0.41 to $53.98, Research, Estimates) and Hewlett-Packard (HWP: up $0.18 to $17.90, Research, Estimates), rose.

The latest economic data showed that the number of Americans filing for jobless claims did not fall as much as economists expected, dropping to 438,000 last week from 493,000 a week earlier. But some paid less attention to the data, which reflect refiled claims by jobless people now allowed to extend benefits.

"These numbers are meaningless, because they draw no distinction between genuine first-time claims and people refiling for extended benefits," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

The reports from Yahoo! and General Electric come before hundreds of companies are set to release March-quarter results in the weeks ahead.

"We are hoping that as earnings season comes up, we'll see some good comparisons," Steve Porpora of William O'Neil and Co. told CNNfn'sMarket Call.

Overall profits probably fell 9.2 percent in the March quarter, according to First Call, for the fifth straight quarterly decline. But corporate America is expected to snap its longest profit slump since 1970 during the June quarter.

Porpora said developments in the Middle East also will determine the short-term direction of the market. Secretary of State Colin Powell has agreed to meet with Palestinian leader Yasser Arafat this weekend in an effort to forge a truce between Israel and the Palestinians.

But one market watcher said the lack of panic at the New York Stock Exchange suggested the worst of the selling has not passed.

"If it was a capitulation, it would be louder," Gary Kaminsky, portfolio manager at Neuberger Berman, told CNNfn's Street Sweep.