Warnings about tech stocks profits, and a possible costly court case in the tobacco industry added to the bad news overnight from Asian markets.

The continuing strike at GM added to the gloom.

Gloom over Asia affected manufacturing stocks and some transport stocks like FedEx. The tech stocks suffered with earnings warnings hitting semi-conductor and disc drive manufacturers.

In the morning the Dow staged a brief rally, but by mid-afternoon the index was down more than 100 points.

At the close, the blue-chip Dow Jones industrial average was off 78.22 points at 8,971.70.

The S&P 500 closed down 6.13 at 1112.28.

The Nasdaq composite index was down a substantial 27.80 points at 1,756.97.

Early in the day stocks were boosted by Greenspan's comments to Congress that the US economy was in a virtuous cycle.

"After an initial relief that Greenspan said nothing, people tought again about the very strong dollar and the very weak yen," said Michael Metz of CIBC Oppenheimer. "It looks like conditions in SE Asia are going to get worse before they get better, and that could have an impact on profit margins for US companies."

There was concern in Asia that the Japanese yen's continued decline against the dollar will lead China to devalue its Yuan currency.

Hong Kong's Hang Seng stock index closed at its lowest level in more than three years, down 5%.

In Taiwan, stocks were at a seven-month low as the Taiwanese dollar slid to its lowest level against the U.S. currency in 11 years.

Stocks in Singapore, Malaysia and Thailand lost between 3 and 5%, and Japan's Nikkei average fell 1.2%.

Among the big movers, Western Digital Corp. tumbled 3-1/4 to 12-1/4 after the computer disk drive maker forecast a larger-than-expected loss in its fiscal fourth quarter, citing the continued global glut of drives.

Another tech stock badly affected by a profits warning was Lattice Semiconductors, down 9-5/8 to 26 7/8.