NEW YORK (CNN/Money) - Concern over a foggy forecast for retail issues and the economy drove blue-chip stocks into the red Thursday, while technology issues got clobbered ahead of Intel's mid-quarter update.

The Dow Jones industrial average lost 141.42 to 8,283.70 to erase all of Wednesday's gains, though it pared its decline from a more than 200-point dip earlier in the session. The Nasdaq composite lost 41.31, or 3 percent, to close at 1,251.00, hitting a one-month low. The Standard & Poor's 500 index gave back 14.25 to end the day at 879.15.

"The 8,200 level has become a point of support for the Dow," John Pickett, NYSE trader with LaBranche & Co., told CNNfn's Market Call. "The Dow tested it this morning and didn't break it. That's when buyers scrambled to use it as an opportunity to take some stocks that have been beaten down."

In a widely anticipated move, No. 1 chipmakerIntel (INTC: down $1.00 to $15.11, Research, Estimates) said it see its third-quarter revenue in a range of $6.3 billion to $6.7 billion, slightly narrower than the range of $6.3 billion to $6.9 billion it had previously estimated. A slew of analysts had cautioned earlier in the week that Intel continues to face weakness in information technology spending by corporations.

Intel gained 59 cents to $15.60 in after-hours trading.

Chip stocks led the decline for techs on the Nasdaq, while blue-chips crumbled following a sales miss for August from retail powerhouse Wal-Mart. But consumer products maker Procter & Gamble was a rare bright spot on the Dow, emerging a winner after upping its earnings forecast.

"The market is clearly in a cha-cha mode. There's very little conviction and that's why we're seeing this kind of volatility," said Douglas Altabef, managing director with Matrix Asset Advisors.

"On a macro level, we are at the beginnings of an economic recovery, not as fast as some people want, and we may have some altercation with Iraq in the next six months. That uncertainty is putting the foot on the accelerator and pulling it off the accelerator at the same time," Altabef added.

Uncertainly over an economic recovery also played its part in the trading session after the latest read on the services sector came in weaker-than-expected.

But market watchers say investors are already focused on Friday's monthly employment report for August for a more clear-cut signal on the economy. Economists polled by Briefing.com expect the unemployment rate to remain unchanged at 5.9%, and they estimate 30,000 new non-farm jobs were created.

"Tomorrow's employment report is critical for the market," said Ralph Acampora, chief technical analyst with Prudential Financial. "Investors are hanging on every number that we get. Anything to do with consumer spending is key because consumers have been supporting the economy."

Kicking off the August sales reports, discount chain Wal-Mart Stores (WMT: down $1.40 to $50.94, Research, Estimates) reported a 3.8 percent increase in its same-store sales -- or sales at stores open at least a year -- falling short of company expectations and well below the year-earlier growth.

Wal-Mart's miss fed fears that a sluggish back-to-school sales season -- hurt by a weak economy -- could set the tone for the rest of the year for the nation's retailers.

Other retail names, including Federated Department Stores (FD: down $0.21 to $35.30, Research, Estimates), operator of Macy's and Bloomingdale's, and Sears, Roebuck & Co. (S: down $0.01 to $44.94, Research, Estimates) also posted lackluster sales for August, while Pier 1 (PIR: up $0.63 to $18.85, Research, Estimates) and J.C. Penney (JCP: up $0.13 to $17.03, Research, Estimates) bucked the trend.

But giving some cheer to the blue-chip index, consumer products maker Procter & Gamble (PG: up $1.29 to $89.85, Research, Estimates) raised its earnings forecast for its first quarter, citing strong performance in its health care business and developing markets. Merrill Lynch boosted its first-quarter, full-year and fiscal 2004 estimates for the company.

On the Nasdaq, chip stocks were the worst performers as the market awaited news out of Intel. Chip and chip-equipment makers -- including Applied Materials (AMAT: down $0.63 to $12.07, Research, Estimates), Advanced Micro Devices (AMD: down $0.46 to $7.99, Research, Estimates), KLA-Tencor (KLAC: down $1.44 to $29.96, Research, Estimates), Broadcom (BRCM: down $0.59 to $15.21, Research, Estimates) saw losses.

Weakness elsewhere in software, networking and telecom issues caused the tech-heavy Nasdaq index to erase all of the previous session's gains.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers 2-to-1 as 1.3 million shares traded. On the Nasdaq, losers topped winners more than 2-to-1 as 1.4 billion shares changed hands.

The latest read on the health of the services sector was weaker than expected. The August non-manufacturing index from the Institute for Supply Management fell to 50.9. Economists had forecast an improvement to 54 from 53.1 in July.

Meanwhile, the July reading on factory orders offered no surprises, coming in line with estimates of a 4.7 percent increase after a 2.4 percent drop in June. Second-quarter productivity growth was revised up to 1.5 percent from an expected 1.1 percent.

Investors shrugged off a pair of better-than-expected economic reports on labor and productivity. Jobless claims fell to 403,000 in the latest week but stayed above the benchmark 400,000 mark, indicating continued weakness in the labor market.

The report precedes the blockbuster report Friday on monthly employment figures for August.

"Each new piece of information on the economy is giving mixed signals," said Joseph Battipaglia, chief investment officer with Ryan, Beck & Co.

"Today's ISM services number was a disappointment. The economy can't improve if the only sector expanding is the consumers," Battipaglia added. "And now the mixed retail result is raising concerns there, too."

Treasury prices rose, with the yield on the 10-year note dropping to 3.92 percent from 3.95 percent late Wednesday. The dollar dipped against the euro but rose versus the yen. Light crude oil futures rose 71 cents to $28.98 a barrel in U.S. trading.

Badly bruised financial issues were sucker-punched again as federal scrutiny expands over alleged impropriety in IPO dole-outs by brokerage firms.

Credit Suisse First Boston and Goldman Sachs (GC: Research, Estimates) were thelatest to receive federal subpoenas seeking information on IPO allocations. Goldman Sachs told CNNfn the firm was cooperating with authorities.

Securities and congressional regulators are already investigating Citigroup (C: down $1.00 to $29.30, Research, Estimates)'s Salomon Smith Barney unit for allegedly influencing stock recommendations by the firm's analysts in order to win investment banking business.

Asia-Pacific stocks finished mostly lower Thursday, although Tokyo's Nikkei index bounced off 19-year lows with a 1.6 percent advance. European markets extended their losses late in the session.