NEW YORK (CNNfn) - The Nasdaq composite index fell for the first time in three sessions Monday after weakness in Cisco Systems, the nation's most valuable technology company, spread across the tech sector.
But the Dow Jones industrial average rose, building on Friday's gains, as strength in American Express and J.P. Morgan offset weakness in Intel and Hewlett-Packard.
A critical report in Barron's magazine over the weekend called Cisco stock overvalued and questioned accounting practices at the computer networking equipment maker.
"When a bellwether is down, it affects the whole group," said Peter Coolidge, senior trader at Brean Murray & Co.
The Nasdaq tumbled 147.44 points, or 3.9 percent, to 3,669.38, erasing all of Friday's gains.
Analysts explaining the sell-off also pointed to concern that Friday's rally -- which came despite a strong April jobs report -- was overdone.
"After having a weekend to think it over, [Friday's trading session] didn't erase all the uncertainty that's out there," said Charles Payne, head analyst at Wall Street Strategies.
The Dow gained 25.77 to 10,603.63. The S&P 500 shed 8.46 to 1,424.17.
More stocks fell than rose. But trading volume was anemic, leading analysts to question the conviction behind the day's losses. Declining issues on the New York Stock Exchange beat advancing ones 1,443 to 1,118.
 Big Board volume hit a meager 782 million shares, the lightest trading day of the year.
Nasdaq losers beat winners 2,602 to 1,415, as just over 1.1 billion shares hanged hands, also a volume low for 2000.
In other markets, Treasury securities fell. The dollar rose against the yen but was little changed versus the euro.
Cisco woes hit tech stocks
Cisco Systems (CSCO: Research, Estimates) fell 5 to 62-3/4 after a Barron's article raised doubts about the company's valuation and accounting practices.
The article praised the fundamentals of the maker of computer networking equipment, but questioned the rationale behind Cisco's lofty market capitalization. Trading at 131 times earnings, Cisco is the world's second most valuable company behind General Electric. Barron's said the company's profit projections may not justify such a valuation.
"Either the fundamentals have to grow much faster or the stock has got to come down," said Richard Cripps, chief market strategist at Legg Mason.
But Jim Glickenhaus, portfolio manager at Glickenhaus & Co., called today's drop a buying opportunity. "It is such a great company in such an amazing space that I do think it should be in everyone's portfolio,' he told CNNfn's Talking Stocks.
An important read on Cisco comes Tuesday, when the company reports quarterly earnings. Analysts polled by First Call/Thomson Financial forecast that Cisco earned 13 cents per share in the period.
Valuation concerns like those affecting Cisco are nothing new for technology firms. The Nasdaq composite index surged 86 percent last year, and fears that tech stocks have climbed too far too fast are a big reason for the slide that began in March. The gauge is down 27 percent from its high.
Monday's losses ranged far and wide. Intel (INTC: Research, Estimates) tumbled 5-3/4 to 117-5/8, Oracle (ORCL: Research, Estimates) shed 4-1/2 to 72-5/16 and Sun Microsystems (SUNW: Research, Estimates) fell 5-1/8 to 85-3/8.
But not all tech stocks lost value. Verio (VRIO: Research, Estimates) surged 22-3/8 to 58-5/16 after Japan's Nippon Telegraph & Telephone agreed to pay $5.5 billion for the Web site manager.
And investors sought safety in financial stocks. American Express (AXP: Research, Estimates) jumped 5-7/16 to 152-1/16 and J.P. Morgan (JPM: Research, Estimates) surged 3-11/16 to 125-7/16.
Fed weighs on markets
With first-quarter earnings reporting season nearly over, many analysts expect range-bound trading ahead of next week's meeting of Federal Reserve policy makers.
"We remain in a stimulus vacuum and the underlying motif this week will be the Federal Reserve meeting next week," Larry Wachtel, market analyst at Prudential Securities wrote in a note to clients Monday.
After Friday's strong jobs report, many analysts forecast that the Fed will raise interest rates May 16 by an aggressive half percentage point to keep runaway growth from generating inflation.
Though steeper rates can hurt stocks, Andrew Barrett, technology analyst at Salomon Smith Barney told CNN's In the Money, that a big rate hike could actually spark a rally. (399K WAV) (399K AIFF)
"It would show the Fed is ahead of the curve on inflation," Barrett said.
The Fed, the nation's central bank, has tightened credit five times since late June, bringing its benchmark lending rate to 6 percent 
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