NEW YORK (AP) -- Wall Street began a holiday-shortened week cautiously Monday, slipping as investors reacted to a bleak outlook from Toyota Motor Corp. and disappointing earnings from drugstore operator Walgreen Co.
The two companies -- both viewed as better-positioned than many of their peers -- provided more evidence that even stronger companies are struggling with dropping consumer demand.
Walgreen's profit fell 10 percent in its fiscal first quarter, due mostly to the costs of opening more than 200 new stores, so the company said it will slow down its expansion because of the recession.
Toyota, meanwhile, slashed its earnings forecast for a second time, warning that it now expects to report an operating loss for the fiscal year through March. It would be the Japanese automaker's first such loss since it began reporting results in 1941, and underscores the challenges facing car companies. Toyota's American rivals, General Motors Corp. and Chrysler LLC, received a $17.4 billion lifeline from the federal government on Friday to stave off a major bankruptcy.
The gloomy corporate news Monday highlighted how weak the consumer is, said Kim Caughey, equity research analyst at Fort Pitt Capital Group. That's a troubling prospect, she said, because it appears the U.S. economy cannot rely on consumer spending to pull it out of its downturn.
"Even though mortgage rates are coming down, we don't see the consumer running out and buying that house," Caughey said.
On Tuesday, the Commerce Department reports on last month's new home sales, while the National Assocation of Realtors reports on existing home sales. Economists forecast that both pieces of data will show declines.
In midday trading, the Dow Jones industrial average fell 64.04, or 0.75 percent, to 8,515.07, after briefly moving into positive territory.
Broader stock indicators also dipped. The Standard & Poor's 500 index fell 14.25, or 1.60 percent, to 873.63, and the Nasdaq composite index fell 30.99, or 1.98 percent, to 1,533.33.
The Russell 2000 index of smaller companies fell 13.04, or 2.68 percent, to 473.22.
Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to a very light 383.3 million shares.
Because trading volumes were very low, and likely to stay that way throughout the week, the market's movements may not be indicative of its long-term direction.
"A truncated week is going to make it tough to generate any firm takeaways from trading," said Craig Peckham, equity trading strategist at Jefferies & Co. "I would expect to see sleepy volumes and a lot of people protecting positions going into year end."
Tax-loss selling -- when investors sell securities at a loss to offset a capital gains tax liability -- might also contribute to the market's weakness until the year's end, Fort Pitt's Caughey noted.
Toyota's U.S.-traded shares fell $3.36, or 5.2 percent, to $61.02.
Walgreen shares fell $1.40, or 5.4 percent, to $24.68.
Wall Street has shown some signs of relative stability in the last few weeks. Since reaching multiyear lows on Nov. 20, the Dow is up about 13 percent and the S&P 500 is up about 18 percent.
Besides relief over the auto bailout, investor sentiment has also grown a bit more upbeat in the past few trading sessions after the Federal Reserve cut the benchmark federal funds rate to a range of zero to 0.25 percent. Investors are looking for any signs that the government is being proactive about reviving the economy.
After doling out hundreds of billions of dollars in aid this year to prop up the troubled auto and financial sectors, the government continues to be tapped by companies for assistance. Some of the country's largest property developers are seeking government help as the threat of default on commercial properties is growing, according to a Wall Street Journal report on Monday.
Another recipient of the government's assistance, American International Group Inc., meanwhile, is selling its Hartford Steam Boiler unit to reinsurer Munich Re AG for $742 million as it works to shed assets to pay back a government loan. AIG received a $150 billion rescue package from the government last month to help it pull through the credit crisis.
AIG shares rose 8 cents, or 5 percent, to $1.68.
Bond prices were mostly lower. The yield on the benchmark 10-year Treasury note, which moves opposite its price, slipped to 2.17 percent from 2.21 percent late Friday. But the yield on the three-month T-bill, considered one of the safest investments, rose to 0.03 percent from zero late Friday.
Light, sweet crude fell $1.04 to $41.32 a barrel on the New York Mercantile Exchange.
The dollar was mixed against other major currencies, while gold prices rose.
Overseas, Japan's Nikkei stock average rose 1.57 percent, while Hong Kong's Hang Seng index dropped 3.34 percent. In afternoon trading, Britain's FTSE 100 was down 1.88 percent, Germany's DAX index was down 1.23 percent, and France's CAC-40 was down 2.31 percent.