NEW YORK (CNN/Money) - U.S. stocks got burned in a broad-based selloff Monday, after yet another addition to the litany of poor economic reports frustrated investors and unnerved an already shaky market.

The Dow Jones industrial average tumbled 269.50 to close at 8,043.63, logging a third straight triple-digit decline, while the Nasdaq composite fell 41.91 to 1,206.01, within spitting distance of a six-year low. The Standard & Poor's 500 index gave back 29.64 to end the day at 834.60.

But some market watchers offered a few positive words despite the gloomy trading session.

"Today's action depends on your investment philosophy," said Phil Dow, market strategist with Dain Rauscher Wessels. "If you're a trader, the concerns are prospects of growth going forward with regard to the economy and corporate earnings. But for investors, there are some bright spots. First off, this decline now has gone over 850 days -- the longest since the second World War. In terms of a market decline, economic growth, while slow, doesn't mean we're going to have a double dip."

"With today's big decline, this isn't a time to be concerned about additional downside but about what can go right in the coming months, primarily a gradual economic recovery," Dow added.

Blue chips were battered all around, with financial stocks absorbing heavy blows after Lehman Brothers cut its 12-month stock price targets on Citigroup (C: down $2.23 to $28.65, Research, Estimates) and J.P. Morgan Chase (JPM: down $1.50 to $22.35, Research, Estimates), followed by a Morgan Stanley downgrade of Prudential Securities. Media and telecom stocks also added to the Dow's woes.

Shares of Citigroup and J.P. Morgan took a beating last month on continued investigations of their ties to collapsed energy trader Enron.

"With the financials, that entire space has been tarnished by a confidence crisis. Also, on a more fundamental level rather than a psychological level, there's no investment banking business going on right now. The concerns remain about the banks' exposure to bankrupt telecoms WorldCom and Global Crossing," said Art Hogan, chief market analyst with Jefferies & Co.

Procter & Gamble's (PG: down $2.40 to $87.44, Research, Estimates) upbeat profit story fell by the wayside amid the widespread disdain.

But a notable exception in the crowd of losers on the Dow were shares of tobacco stocks Philip Morris (MO: up $2.29 to $47.50, Research, Estimates), a winner after the California Supreme Court ruled that tobacco makers can have limited protection from smoker lawsuits.

Meanwhile, chips and telecoms were the weak spots on the Nasdaq.

Tuesday's spotlight story will likely be quarterly earnings from networking systems provider Cisco Systems (CSCO: Research, Estimates), on tap to report after the close of trading. Cisco shares were pressured throughout the trading session.

For the fifth straight trading session, a reading of the economy proved to be disappointing to investors.

This time, it was the Institute for Supply Management (ISM), whose index of service sector activity fell to 53.1 in July from 57.2 in June and below expectations of a 55 reading. The report comes closely on the heels on the ISM's troubling read on manufacturing activity last week that showed a huge drop to just a half-point above the crucial 50 level in the month of July. A level above 50 signals expansion.

The ISM services report also joins employment, consumer and gross domestic product data in disappointing investors since last Tuesday.

"In terms of the thought process on the economy, today's ISM data on the services sector didn't help," Jefferies' Hogan said. "It didn't really come as a surprise -- but, having said that, the broader thought process that the economy isn't doing well in the second half compared with the first half has investors concerned that we may need to test the lows of the market again."

Describing the economic recovery as a "tail wagging the dog" story, Thomas Weisel Partners lowered its third-quarter 2002 GDP growth forecast to 2.3 percent from 3.6 percent, and its fourth-quarter forecast to 3.2 percent from 4 percent.

"We see the economy expanding in the second half of 2002," the firm said in a morning note. "However, the pace of growth will both be moderated and further below potential, adversely impacting corporate profits. Many downside risks exist in the near term, which will likely further restrain the pace of recovery."

Investors appeared to ignore upbeat profit news from Dow heavyweight Procter & Gamble (PG: down $2.40 to $87.44, Research, Estimates), the maker of such household products as Tide laundry detergent, Crest toothpaste and Pampers disposable diapers. The company reported a fourth-quarter profit of 77 cents a share, up from 63 cents a year earlier and 2 cents a share more than analysts expected.

The company also projected higher sales and earnings for the current quarter.

Chip equipment leader Advanced Micro Devices (AMD: Research, Estimates) advanced following a positive mention in the latest Barron's, saying that the company is poised to survive the tech downturn. The article also said the company's new line of processors, code-named Hammer, could be the next big thing, helping it to gain a competitive edge over Intel.

Intel (INTC: down $0.81 to $15.88, Research, Estimates) shares were trading lower.

But Advanced Micro's gain offered no resistance to the overall slide in chip stocks that took the Philadelphia Semiconductor index down 6 percent in afternoon trading, sinking to 283.11, hitting fresh multiyear lows. The chip index had not moved below 300 since 1998.

Also weighing down the Dow were telecom components SBC Communications (SBC: down $1.45 to $26.10, Research, Estimates) and AT&T (T: down $0.91 to $8.69, Research, Estimates).

Swedish telecoms gear maker Ericsson was stung by negative comment from both Deutsche Bank, which cut its price target on the stock.

"We're seeing weakness in cable companies today, specifically cable firm Comcast (CMCSK: down $2.76 to $16.80, Research, Estimates),and that's probably pulling AT&T lower," said Tim Horan, telecom analyst with CIBC World Markets.

Susan Calla, telecom analyst with Friedman Billings Ramsey, attributed the sector slump to investor fears about the economy.

"People are concerned about a double dip and are selling out of the economically sensitive stocks like telecoms," Calla said.

Microsoft (MSFT: down $0.42 to $43.99, Research, Estimates) turned positive after announcing it has begun implementing some of the provisions of its federal antitrust settlement, even though the case still is making its way through the courts. The software maker said it will provide more technical information about its Windows operating system products.

Meanwhile, Lehman said it is changing its ratings system to "underweight," "equal-weight" and "overweight," and has adjusted the ratings of a number of prominent tech companies, including Dell Computer (DELL: down $1.02 to $23.11, Research, Estimates) and Sun Microsystems (SUNW: down $0.13 to $3.53, Research, Estimates).

Among media and entertainment stocks, Walt Disney (DIS: down $1.04 to $14.27, Research, Estimates) dropped after its ratings-challenged ABC television network reportedly made a production deal with HBO, the cable TV network and home of such critically acclaimed shows as "Sex and the City," "The Sopranos" and "Six Feet Under." AOL Time Warner (AOL: down $0.35 to $9.95, Research, Estimates), parent of HBO and CNN/Money, were also dragged lower.

Credit rating agency Moody's Investor Service said it has placed Disney's debt on review for a possible downgrade.

Beleaguered energy trader Dynegy (DYN: down $0.71 to $1.41, Research, Estimates) took another blow after a former senior executive sued the company, charging he was fired last year because he refused to cooperate with a plan to cook the company's books in 2000.

The problems stacked up for the group after power producer Mirant (MIR: down $0.56 to $2.93, Research, Estimates) said the Securities and Exchange Commission launched an informal inquiry into possible sham energy trades and its accounting practices. Sector members El Paso (EP: down $1.89 to $13.41, Research, Estimates) and Calpine (CPN: down $0.38 to $3.32, Research, Estimates) joined the downward slide.

Looking overseas, Asian-Pacific marketsfinished mostly lower with Japan's Nikkei index little changed. Concerns about the global economy pressured European bourses lower.

Treasury prices rallied, taking two-year Treasury note yields to a new all-time low for the second session in a row, while the yield on the five-year note fell to a 40-year low.

"Looking at the economy, there's been a lot of market chatter about the Federal Reserve cutting interest rates," said Charles Lemonides, chief investment officer with ValueWorks. " The Treasurys market is certainly anticipating such action. We're in the dog days of summer and it's hard to figure out what's going to get us out of this muck and mire," Lemonides said.

Market breadth was negative. Decliners led advancers 12-to-5 on the New York Stock Exchange, with 1.3 billion shares traded. Losers led winners 2-to-1 on the Nasdaq with 1.3 billion shares changing hands.

Light crude oil fell 26 cents to $26.58 a barrel in U.S. trading, while gold enjoyed a bounce higher.