NEW YORK (CNN/Money) - Tech stocks fell to their lowest level in six years Monday, deflated by a warning from telecom equipment maker JDS Uniphase, while renewed jitters about a possible war with Iraq weighed on the broader market.

"The problem remains uncertainty on the part of investors," said John Bollinger, technical analyst with Bollinger Capital Management.

"Terrorism and Iraq are contributing to the global uncertainty. With the economy, there's uncertainty because of wildly disparate reports and no discernible trend," he added, noting the corporate profit picture also remains muddy at best.

Tech stocks tumbled after telecom JDS Uniphase warned on its revenue guidance. Software and chip stocks also got caught in the quicksand after analysts downgraded their estimates on foggy forecasts for the sectors going forward.

The Nasdaq composite index tumbled 36.16 to 1,184.93, its lowest close since Sept. 12, 1996, when it hit 1,165.81.

The Dow Jones industrial average lost 113.87 to 7,872.15, ending back near its recent four-year lows. The Standard & Poor's 500 index gave back 11.65 to 833.70.

Among blue chips, retailers, financials and other issues got hammered, hurt by Wal-Mart's cautious sales forecast.

Reflecting on the deteriorating environment for stocks amid a muted economic economy, Morgan Stanley analyst Steve Galbraith cut his 2002 earnings estimate for the S&P to $47.50 from $50 and cut his 12-month price target for the index to the 1,050 range.

War tensions also intensified over the weekend after Iraq said it will not cooperate with any new U.N. resolution on arms inspections, thus raising the possibility for a U.S.-led attack.

The tensions pushed oil to a 19-month high, with light crude oil futures up 87 cents to $30.71 a barrel in New York. Also pushing oil up: Hurricane Isidore, which hit Mexico's Yucatan Peninsula and could hamper oil production on platforms in the Gulf of Mexico.

Meanwhile, in the background lurked Tuesday's scheduled meeting of the Federal Reserve, at which the central bank's policy makers are widely expected to hold interest rates steady.

Still, investors will carefully dissect the Fed's accompanying statement for any signs that the central bank may resume its rate-cutting campaign later this year, given the recent slump in stocks and the sluggish economic recovery.

The Fed cut its target for short-term rates 11 times last year in a bid to bolster the economy during a recession that began in March 2001 and to help it rebound from the Sept. 11 terrorist attacks.

The Nasdaq's decline Monday brings it back below where it was when Fed Chairman Alan Greenspan made his famous "irrational exuberance" remarks in late 1996.

"How do we know when irrational exuberance has unduly escalated asset values....," Greenspan said Dec. 5, 1996, in a speech to a Washington research group. Investors took Greenspan's remarks to mean that U.S. stocks were perhaps overvalued, and prices dropped, although the 1990s bull rally resumed.

"Greenspan is often chided for those comments but looking back they seemed very timely," Bollinger said.

The Fed's latest decision on interest rates is due Tuesdsay afternoon.

Also on tap for Tuesday is the Consumer Board's latest reading on consumer confidence. On the earnings front, Goldman Sachs and Lehman Brothers are expected to report results before the opening bell on Wall Street.

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Fiber-optic network supplier JDS Uniphase (JDSU: down $0.27 to $1.87, Research, Estimates) warned Monday that its sales for the quarter ending this month will be 5 percent below earlier guidance, citing continued weakness in telecom development. The company did reiterate its forecast for an operating loss of between 6 and 8 cents a share.

In more troubling tech news, software stocks felt some headwind from a Lehman Brothers cut of its earnings and revenue estimates for a slew of names in the sector -- including PeopleSoft (PSFT: down $0.71 to $12.88, Research, Estimates). The firm said it believes technology spending in December is "likely to be quite anemic with little likely budget flush."

Credit Suisse First Boston also trimmed its 2002 and 2003 estimates for several semiconductor equipment makers, citing a weak capital spending environment. Novellus Systems (NVLS: down $1.38 to $20.77, Research, Estimates), KLA-Tencor (KLAC: down $1.39 to $26.63, Research, Estimates), and Applied Materials (AMAT: down $0.74 to $11.20, Research, Estimates) featured on the brokerage's target list.

Microsoft (MSFT: down $2.23 to $45.23, Research, Estimates) also took a tough blow. CEO Steve Ballmer said in a published report over the weekend that conditions in its European market were "rough" and would remain so until the telecommunications and financial services industries see a recovery.

PC-maker Dell Computer (DELL: down $0.64 to $24.19, Research, Estimates) shares closed lower on suggestions that the company's balance sheet could be weakening , according to a published report in the New York Times. The report indicated that as a consequence, the company could lose one of its key advantages: the ability to strong-arm suppliers into waiting 37 days, on average, to be paid for their goods.

Soundview Technologies reduced its estimates for Microsoft's December 2002 and September 2003 quarters, citing weakness in PC and information technology spending, and also cut estimates for Dell's fiscal fourth-quarter revenue and earnings.

But No. 3 U.S. long-distance telephone company Sprint's FON Group (FON: up $0.40 to $9.42, Research, Estimates) was a spot of relief amid the turmoil after guiding higher for its 2002 earnings and announcing the sale of its phone directory operations to R.H. Donnelley (RHD: up $0.11 to $23.70, Research, Estimates) for $2.2 billion.

Outside of techs, the blue-chip index showed weakness across the board. Wal-Mart Stores (WMT: down $2.10 to $52.60, Research, Estimates) slumped after the world's largest retailer said it expects September same-store sales -- or stores open at least a year -- to come in near thelow end of its growth forecast of between 4 and 6 percent.

Home Depot (HD: down $1.35 to $29.88, Research, Estimates) shares dropped on the back of a published article suggesting that the company's new stores are cannibalizing sales at its older stores in an already saturated market for the home improvement retailer.

In the morning's economic report, the Conference Board's index of leading economic indicators for August came in slightly weaker-than-expected at a decline of 0.2 percent, the third-straight monthly drop. Economists surveyed by Briefing.com had forecast a dip of 0.1 percent.

Asian-Pacific stocks finished lower Monday; Tokyo was closed for a holiday. European markets tumbled to five-year lows Monday, led by a decline in the Dax on the close re-election of German Chancellor Gerhard Schroeder.

Treasury prices rallied, pushing the 10-year note yield -- already at the lowest point since the 1960s -- down to 3.69 percent from 3.78 percent late Friday. The dollar gained against the yen and the euro. Gold was boosted on safe-haven buying from stock-wary investors.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers nearly 7-to-3 as 1.3 billion shares traded. On the Nasdaq, losers topped winners 3-to-1 as 1.2 billion shares changed hands.

"With today's dips and testing of the July lows we might find a sustainable low here, but only if the information picture for investors changes," said Bollinger. "I don't see that happening anytime soon."