NEW YORK (CNNMoney.com) - Stocks tumbled Wednesday, as disappointing earnings from tech bellwethers Yahoo! and Intel gave investors an incentive to keep retreating after the early 2006 rally.

The Nasdaq composite (down 23.05 to 2,279.64, Charts) slumped nearly 1 percent, but managed to recover from bigger declines earlier in the session.

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The Dow Jones industrial average (down 41.46 to 10,854.86, Charts) and the S&P 500 (down 5.00 to 1,277.93, Charts) index both lost close to 0.4 percent.

A pair of big tech companies reported results after the close Tuesday that disappointed many on Wall Street, giving investors an incentive to retreat after sprinting in the first week or so of the year.

"You have Yahoo! and Intel today, but also the techs overall did really well earlier in the month, and I think people are taking profits where they can," said Maria Fiorini Ramirez, president of money manager Maria Fiorini Ramirez Inc.

This being the first big week of earnings also caused some anxiety for investors, she added. A steep decline for the Japanese Nikkei added to the concerns.

Investors got some mixed tech news after the close Wednesday, setting stocks up for a modestly lower open Thursday, according to Nasdaq and S&P futures.

After the close, Apple Computer (Research) reported fiscal first quarter earnings that rose from a year ago and met forecasts. However, the company also warned that fiscal second-quarter earnings and revenue will come in below analysts' forecasts and that sent shares lower in extended-hours trade.

eBay (Research) also released its earnings late Wednesday. The online auctioneer issued quarterly earnings that rose from a year ago and beat Wall Street forecasts.

However, the company issued first quarter and full-year 2006 earnings and revenue guidance that is below forecasts, sending shares lower in after-hours trade.

On a more upbeat note for tech, Advanced Micro Devices (Research) reported quarterly earnings, revenue and gross profit margins that were up from a year ago and above estimates. Shares jumped eight percent after the close.

Thursday morning brings earnings from Merrill Lynch and reads on housing starts, building permits and manufacturing in the Philadelphia region.

On Tuesday, Intel, the world's biggest maker of computer chips, reported higher quarterly earnings and revenue though the numbers missed analysts' forecasts. Following the news, a slew of brokerages downgraded the stock, including Piper Jaffray and Citigroup.

Intel (down $2.92 to $22.60, Research) slumped more than 11 percent on Wednesday.

Other chip stocks had fallen in tandem through the early afternoon, but the sector managed to trim losses by the late afternoon.

Yahoo! (down $4.93 to $35.18, Research) tumbled 12.3 percent after reporting quarterly earnings late Tuesday that missed forecasts. The Web search company also issued a first-quarter outlook that was shy of estimates.

That weighed on other Web stocks, with the Goldman Sachs Internet (Charts) index losing 2.2 percent.

IBM (up $0.80 to $83.80, Research) reported higher quarterly earnings on lower quarterly revenue after the close Wednesday. However, investors focused on the positive and pushed the stock higher.

Exxon Mobil (down $0.86 to $60.68, Research) lost 1.4 percent and was one of many oil stocks dragging down the Amex Oil (down 16.07 to 1,081.56, Charts) index.

Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.63 billion shares. On the Nasdaq, decliners topped advancers by eight to seven on volume of 2.24 billion shares.

The stock market had gotten off to good start in the new year, with the major gauges gaining in the first seven sessions of the year. But since then, the tone has been negative, with investors cashing out of some of the gains.

"Fundamentally, I think the stock market is fairly valued, but there are a lot of issues around that are causing investor concern," said Jack Ablin, chief investment officer at Harris Private Bank.

"We are still heading toward a standoff with Iran, there's the potential disruption in Nigeria, and now the Japanese market downdraft and the earnings news from Yahoo! and Intel having an impact today," he added.

U.S. light crude oil for February delivery fell 58 cents to settle at $65.73 a barrel on the New York Mercantile Exchange. Oil prices jumped almost 4 percent Tuesday on a mix of worries about Nigeria, and Iran's nuclear program threatening supplies.

In global trade, Tokyo stocks tumbled for a second straight session, with the market ending its session early due to a slew of sell orders. (For a look at this story and what it could mean for U.S. investors, click here.)

European stocks ended lower too, hurt by weakness in tech issues.

In other news, a report showed a surprise drop in consumer prices in December. But prices excluding the volatile food and energy components edged higher, in line with economists' estimates.

Investors took in stride a mostly upbeat "beige book" read on the economy, released Wednesday afternoon.

Treasury prices slipped modestly, with the 10-year note holding at roughly 4.33 percent. Bond yields and prices move in opposite directions.

The dollar was little changed versus the euro and slipped versus the yen.

COMEX gold for February delivery fell $10.20 to settle at $544.10 an ounce.