NEW YORK (CNN/Money) - Profit warnings from Colgate and Unilever punished the blue-chip averages Monday, but another rally in the chip sector saved the tech-heavy Nasdaq from the same declines.

Some hesitation ahead of Tuesday's widely expected Fed rate hike added to the session's negative tone.

The Dow Jones industrial average (down 79.57 to 10,204.89, Charts) fell nearly 0.8 percent, and the Standard & Poor's 500 (down 6.35 to 1,122.20, Charts) index lost nearly 0.6 percent.

The Nasdaq composite (down 2.03 to 1,908.07, Charts) closed a few points below unchanged. It was spared bigger losses thanks to another strong showing in the semiconductor sector.

The Federal Reserve meets Tuesday to discuss short-term interest rates, and the central bank is widely expected to boost the fed funds rate, a key overnight bank lending rate, by a quarter-percentage point to 1.75 percent.

"I think a quarter-percentage point hike is built into the market at this point, said Barry Hyman, equity strategist at Ehrenkratz King Nussbaum. "What they say will, of course, be key."

In particular, what the central bank has to say about future interest-rate rises this year will be of interest, because there are only two policy-setting meetings left.

Most Fed watchers think the bank will hold off on raising rates during at least one of the last two meetings, due to the recent slide in bond rates -- which hints at a weakening economy -- and recent lackluster economic news.

The Fed's decision Tuesday is due at around 2:15 p.m. ET.

Ahead of the Fed, reports are due on the housing market.

Due at around 8:30 a.m. ET, August housing starts are expected to have fallen to a 1.93 million unit annual rate from a 1.978 million unit rate in July. Building permits are expected to have fallen to a 1.985 million unit annual rate in August from a 2.066 million unit annual rate in July.

Also on Tuesday, Goldman Sachs (GS: down $0.37 to $91.68, Research, Estimates) and Lehman Brothers (LEH: down $0.36 to $76.02, Research, Estimates) release their earnings, kicking off a week heavy on brokerage results. (For a preview of these earnings, click here.)

In other earnings news, Adobe Systems (ADBE: down $0.19 to $47.95, Research, Estimates) reported earnings after the close Monday. The software maker said it earned 43 cents per share, four cents more than expected and up from 27 cents a year earlier.

The last two weeks of the quarter are bound to bring a slew of earnings pre-announcements. Monday brought negative ones.

Colgate-Palmolive (CL: down $6.10 to $48.23, Research, Estimates) tumbled more than 11 percent, after warning that results in the second half of the year won't meet estimates, due in part to higher marketing costs.

Unilever (UN: down $2.78 to $58.16, Research, Estimates) warned that current-quarter earnings would miss estimates, due to weaker global sales. Shares fell 4.5 percent and dragged down other big consumer products companies, including Dow component Procter & Gamble (PG: down $1.88 to $54.38, Research, Estimates).

Among other movers, Pfizer and Citigroup fell following analyst downgrades.

Morgan Stanley cut its rating on Pfizer (PFE: down $0.73 to $30.99, Research, Estimates) to "equal weight" from "overweight" and trimmed its price target, saying the No. 1 drugmaker isn't likely to continue outperforming its peers because of limited growth prospects for current products and ones in development.

Additionally, Merrill Lynch cut its rating on Citigroup (C: down $1.55 to $45.40, Research, Estimates) to "neutral" from "buy," saying the process of balancing growth and ethics will be a slow process for the nation's biggest financial services company. The downgrade followed two recent incidents.

Hyman said that beyond Monday's corporate news, factors pressuring stocks include the continued rise in oil prices, seasonal weakness in September, and concerns that the economy is not rebounding as soundly from the summer slump as some might have hoped.

Additionally, "the S&P 500 had risen for six straight weeks prior to this, so you're seeing a little pullback, coupled with some negative news out of Citigroup and Colgate," said Larry Wachtel, market analyst at Wachovia Securities.

Sanford Bernstein issued a bullish note on chips, suggesting investors overweight the sector in their portfolios. His note gave the semiconductors a nudge in the early going.

Chips also gained in an extension of last week's run-up.

Intel (INTC: up $0.33 to $20.92, Research, Estimates) gained 1.6 percent, and Applied Materials (AMAT: up $0.69 to $17.59, Research, Estimates) added 4 percent.

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Novellus Systems (NVLS: up $1.17 to $27.05, Research, Estimates), which makes tools to produce chips, rallied 4.5 percent, after announcing that it has extended its stock buyback plan.

In addition, chipmaker PMC-Sierra (PMCS: up $0.39 to $9.86, Research, Estimates) turned higher. The stock had fallen in the first hour of trade, following the company's warning that current-quarter results would miss estimates.

The Philadelphia Semiconductor (up 11.40 to 399.90, Charts) index, or the SOX, added nearly 3 percent, after having been higher in the morning.

But countering the strength in chips was weakness in other areas. Oracle (ORCL: down $0.11 to $11.40, Research, Estimates) fell 1 percent, Internet stocks declined, and biotech issues fell as well.

Shares of Maxim Pharmaceuticals (MAXM: down $2.90 to $3.04, Research, Estimates) lost nearly 49 percent in active Nasdaq trade, after tests of its drug for the treatment of liver cancer failed to improve patients' survival rates.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by more than nine to seven as 1.19 billion shares changed hands. On the Nasdaq, losers topped winners by nearly three to two on volume of 1.56 billion shares.

The major indexes were mixed last week. The Nasdaq and S&P 500 rose, and the Dow fell as investors cycled money out of blue chips and into beaten-down tech shares. Surging oil prices took a toll as well.

Oil prices rose anew Monday on more supply worries, as Russia's Yukos suspended exports to China and Tropical Storm Jeanne posed another threat to U.S. oil shipments. U.S. light crude for October delivery jumped 76 cents to settle at $46.35 a barrel on the New York Mercantile Exchange.

Treasury prices rose, pushing the 10-year note yield down to 4.05 percent from 4.11 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and fell versus the yen.

COMEX gold fell 40 cents to settle at $407 an ounce.