DOW TAKES SLIDE; BANKS, NET LEAD DOWNHILL RUN.

Byline: Eileen Glanton Associated Press 

Stocks tumbled Monday as investors shed Internet and bank shares, fearing that profits will be hampered in coming months by threats as diverse as higher interest rates and the Year 2000 bug.

The Dow Jones industrial average fell 174.61, or 1.6 percent, to close at 10,654.67. At one point late in the session, the blue-chip average had lost almost 203 points.

Broader market indicators were also sharply lower. The Standard & Poor's 500 fell 23.64 to 1,306.65, and the Nasdaq composite fell 66.54 to 2,453.6.

After several listless sessions on Wall Street, investors seized upon some industry analysts' warnings as a catalyst for a sell-off.

``Volume is still very low, so when this market finally chose a direction, it was bound to be pretty extreme,'' said Arthur Hogan, chief market analyst at Jefferies & Co.

Bank stocks were the first to fall. Citing concern about the Year 2000 computer bug, Credit Suisse First Boston on Monday issued a ``sell'' recommendation for Citigroup, Chase, J.P. Morgan and Bank One.

Credit Suisse's banking analyst Michael Mayo said that while U.S. banks appear to be well prepared for potential glitches, many of their international counterparts may be prone to computer problems that could disrupt business and hurt earnings.

``Banks are the safest place to keep your money for the year 2000; it's the bank stocks that we're worried about,'' Mayo said. Every stock on his list tumbled: Citigroup fell $2.6875 to $65.125, Chase lost $3.0625 to $75.875, J.P. Morgan fell $1.9375 to $136.75 and Bank One dropped $1.3125 to $58.50.

Internet stocks led the Nasdaq stock market's decline as investors shed some high-priced stocks in search of bargains among less well-known issues.

``People are finally getting bearish on the dot-com stocks,'' Hogan said. The trend was underscored as Prudential Securities' Ralph Acampora, a research director well known for his bullish market outlook, issued an in-house report that suggested many Web-related stocks are at the top of their price range.

Internet stocks have reached lofty levels despite that fact that few are profitable. Analysts now say that if higher interest rates start hampering corporate profits, investors may become less willing to pay up for companies that earn no profits at all.

In recent sessions, investors have moved gradually toward old-fashioned stocks whose fortunes are closely tied to the performance of the economy. Analysts said those companies have been undervalued in recent months and now appear less vulnerable than high-flying Internet issues.

The weakness in technology shares carried over to big-name computer makers. IBM contributed most to the Dow's decline, tumbling $6.8125 to $223.5625.

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PHOTO (Color) Traders work the floor Monday on Wall Street as the Dow Jones average drops by 1.6 percent.

Shawn Baldwin/Associated Press