NEW YORK (CNN/Money) - U.S. stock markets ended lower Thursday after a day of mixed corporate earnings and analyst interpretation of those earnings failed to attract buyers.

The Nasdaq composite index closed down 40.30 to 1,356.95. The Dow Jones industrial average, a day removed from the end of its seven-session losing streak, slipped 132.99 to 8,409.49. The Standard & Poor's 500 index ended down 24.48 to 881.56.

It was the Dow's lowest close since Sept. 21, when the market tumbled in the aftermath of the terrorist attacks. The S&P 500 hasn't seen Thursday's levels since June, 1997, the start of a stock market run that has all but vanished.

"What you have in this type of environment is that when rallies fail or even stall, people say it's just time to dump," said Charles Payne, CEO of Wall Street Strategies.

"Today's activity is pretty gloomy," said David Herron, head of listed trading at Schwab Capital Markets. "The Nasdaq and S&P weakness does not look good for the marketplace."

"We're seeing a lot of volatility, a lot of indecision as people bail out of stocks and other people jump in," Herron said. "We could be seeing the classic signs of bottoming, but we thought the market was topping for three years before it went down, so maybe we're going to be thinking it's bottoming for three years before it goes up."

IBM (IBM: up $1.36 to $72.05, Research, Estimates), the world's biggest supplier of computer hardware and information technology services, posted a sharply lower second-quarter profit late Wednesday. But the earnings were higher than recently reduced forecasts, and company officials said they expect to meet the Wall Street consensus for 2002 earnings.

But Siebel Systems (SEBL: down $2.12 to $9.62, Research, Estimates) dragged on the technology sector. Credit Suisse First Boston significantly slashed its 2002 and 2003 earnings estimates for the business software provider a day after the company posted a sharp drop in its second-quarter profit, missing Wall Street estimates.

Finnish cell phone maker Nokia (NOK: down $0.79 to $13.33, Research, Estimates) reported a second-quarter profit Thursday that was mostly in line with recently lowered forecasts, and generally reaffirmed its forecast for second-half income.

Dow component and forest products company International Paper (IP: down $0.54 to $39.66, Research, Estimates) reported earnings of 35 cents per share, 15 cents above estimates and better than the 13 cents earned a year earlier. Analysts were expecting earnings of 20 cents per share.

Another Dow component, tobacco marketer Philip Morris (MO: down $1.67 to $42.45, Research, Estimates), reported earnings of $1.24 a share, a penny above estimates and higher than the $1.03 earned in the prior year.

But Merrill Lynch downgraded financial services firm J.P. Morgan (JPM: down $0.94 to $27.20, Research, Estimates) to "buy" from "strong buy" and cut its 2002 earnings estimates, saying that the downgrade reflects that "investment bank results are likely to stay depressed through 2003."

Pharmaceutical stocks struggled as Eli Lilly (LLY: down $2.36 to $48.54, Research, Estimates) plunged on renewed manufacturing concerns that could delay certain drugs.

European markets ended mostly higher. Asian-Pacific stocks finished mostly higher Thursday, with Tokyo's Nikkei index up nearly 2 percent.

Treasury prices were slightly higher, with the 10-year note yield down to 4.61 percent. The dollar slipped against the euro, but gained ground against the yen.

Light crude oil futures fell 31 cents to $27.70 a barrel in New York, where gold fell 60 cents to $317.10 an ounce.

In economic news, the number of Americans filing new claims for unemployment benefits last week fell 26,000 to 379,000. Economists were expecting a decline to 395,000.

And the Conference Board, a private research firm, said its index of leading economic indicators was unchanged at 112.4 in June after rising 0.4 percent in April. Economists, on average, expected the index to be unchanged, according to Briefing.com.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by 2-to-1 as 1.71 billion shares changed hands. On the Nasdaq, decliners beat advancers 12-to-5 as 1.80 billion shares traded.