NEW YORK (CNN/Money) - U.S. stocks fell for a third straight session Wednesday as investors wary over the prospects for technology companies unloaded Novellus Systems, Nokia and JDS Uniphase.

The Nasdaq composite index fell 27.78 points, or 1.7 percent, to 1,624.39, widening its year-to-date loss to 16.7 percent. The Dow Jones industrial average slipped 58.54 points, or 0.6 percent, to 9,923.04 and is down 1 percent on the year. Off 7 percent in 2002, the Standard & Poor's 500 index fell 6.89, or 0.6 percent, to 1,067.66 Wednesday.

A decline in Novellus Systems spread throughout the chip equipment sector after the company was unable to forecast business conditions into the second half of the year. Downbeat brokerage comments hit telecom equipment maker JDS Uniphase and Nokia, the No. 1 cell phone maker.

Mike Farrell, a quantitative analyst at David L. Babson, blames some of the market's latest problems on the weakening dollar, which continued its slide against the euro and yen Wednesday.

The dollar's drop can drive up inflation for the import-hungry United States, sending bond yields higher and making it more costly to borrow money. Overseas investors, big holders of U.S. stocks, may sell those assets as the dollar weakens.

"If the dollar continues its decline, this is an extraordinary event for the U.S. economy," said Farrell, who is betting that technology companies will benefit from more competitive exports.

The market's latest losses continued to lift gold prices, which surged above $328.60 an ounce as investors turned to the traditional safe-haven investment now up 17 percent this year.

More stocks fell than rose in light volume. On the New York Stock Exchange, declining stocks topped advancing ones 9-to-7 as 1 billion shares traded. Nasdaq losers beat winners nearly 2-to-1 as 1.4 billion shares changed hands.

Treasury securities rose.

Novellus Systems (NVLS: down $3.27 to $43.40, Research, Estimates) fell after the chip equipment maker raised its earnings target for the second quarter but offered no business forecasts beyond the current quarter. Rival Applied Materials (AMAT: down $1.02 to $23.10, Research, Estimates) also slipped.

Shares of Novellus rose sharply ahead of Tuesday's call, leading some investors to unload it after the run up.

Nokia (NOK: down $0.54 to $13.75, Research, Estimates) suffered from cautious comments by UBS Warburg, which cut earnings estimates and its price target for the mobile phone maker. Losses spread to rival Ericsson (ERICY: down $0.07 to $2.31, Research, Estimates).

Credit Suisse First Boston cut its rating on optical equipment maker JDS Uniphase (JDSU: down $0.22 to $3.77, Research, Estimates) to "buy" and lowered its price target to $7 a share from $10.

A two-year pullback in technology spending has shown few signs of turning around, frustrating investors waiting for recovery.

Charles Pradilla, chief market strategist at S.G. Cowen, expects the market to go nowhere until corporate accounting issues clear up and the telecommunications business bottoms out.

"People are very leery," said Pradilla, who calls many stocks expensive. Still, he does not rule out a short, powerful rally like those that have punctuated the bear market of the last two years.

New questions about the reliability of accounting came from Halliburton (HAL: down $0.63 to $18.72, Research, Estimates). The oil services company once run by Vice President Dick Cheney said the Securities and Exchange Commission has initiated a preliminary investigation into the company's books.

Gains in American Express (AXP: up $0.68 to $42.36, Research, Estimates), Merck (MRK: up $1.09 to $57.13, Research, Estimates) and Philip Morris (MO: up $0.91 to $56.01, Research, Estimates) spared the Dow from bigger losses a day after the blue chip index wiped out its gain for the year.

Traders said an accidental early morning explosion in New York spooked a market that's been on edge since Sept. 11. Underground explosions caused several manhole covers to pop into the air near the Empire State Building. A spokesman for utility ConEd told Reuters that overheated underground electrical wiring caused the disruptions.

The latest losses for technology stocks come a week before communications industry leaders gather in Atlanta for the annual Supercomm conference. After borrowing heavily during the late 1990s, the industry is suffering from overcapacity and sluggish demand