NEW YORK (CNN/Money) - U.S. markets suffered a broad-based selling early Monday as investors dumped stocks amid worries about a potential military conflict with Iraq.

Around 9:35 a.m. ET, the Nasdaq composite (down 11.12 to 1331.02, Charts), Dow Jones industrial average (down 74.25 to 8056.76, Charts) and Standard & Poor's 500 (down 8.67 to 852.73, Charts) index all declined. The Dow and S&P 500 are back down to their mid-October lows.

U.N. weapons inspectors are due to report to the Security Council at 10:30 a.m. ET. They are expected to report that they have found no proof of an Iraqi nuclear weapons program, but that Iraq has also not offered full cooperation. They are also likely to ask for more time to continue their work.

Speaking at the World Economic Forum in Davos, Switzerland, U.S. Secretary of State Colin Powell said that if necesary, the United States is prepared to act alone against Iraq.

On Tuesday, President Bush is expected to discuss Iraq within his State of the Union address. The Federal Reserve's two-day interest setting policy meeting also starts Tuesday.

Markets in Europe were down at midday, while Asian-Pacific stocks closed lower Monday.

Treasury prices were little changed in early trading, with the 10-year note yield at 3.93 percent. The dollar continued to lose ground versus the euro and yen overnight, then recouped some of it in early U.S. trading.

The war worries lifted Brent oil futures overnight, but the price retreated 18 cents to $30.31 a barrel in London. Gold rallied above $370 an ounce overnight, but traded at $368.70 in New York.