NEW YORK (CNN/Money) - U.S. investors swallowed more bitter pills Monday morning --causing stocks to retreat sharply at the open -- after telecom company JDS Uniphase issued a revenue warning and Iraq snubbed any international effort to pass new resolutions on weapons inspectors.

Oil spiked to a 19-month high in early trade on the latest Iraq development.

Around 10:05 a.m. ET, the Dow Jones industrial average lost 108.41 to 7,877.61, while the Nasdaq composite lost 19.89 to 1,201.20. The Standard & Poor's 500 index gave back 10.54 to 834.85.

Fiber-optic network supplier JDS Uniphase (JDSU: down $0.10 to $2.04, Research, Estimates) warned early 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 cents and 8 cents a share.

In more troubling tech news, software stocks could feel some headwind after Lehman Brothers cut its earnings and revenue estimates for a slew of names in the sector, saying 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.

Meanwhile, war tensions 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 military action in Iraq.

The Dow Jones industrial average begins Monday at 7,986.02 in the aftermath of a brutal week. The blue-chip index gained more than 43 points Friday but lost 4 percent for the week. The Nasdaq composite index is at 1,221.09; its Friday advance of 4.64 merely cut into a loss that amounted to 5.5 percent.

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

Treasury prices rose in early trading, pushing the 10-year note yield -- already at the lowest point since the 1960s -- down to 3.70 percent from 3.78 percent late Friday. The dollar fell against the yen and the euro.

Continued concern about oil supplies should the U.S. engage in military action against Iraq helped send Brent oil futures up 37 cents to $28.80 a barrel in London. Gold prices rose.

The Conference Board's index of leading economic indicators for August fell 0.2 percent, wider than the 0.1 percent decline forecast by economists surveyed by Briefing.com and the revised 0.1 percent dip in July.