Stocks in New York fell sharply again yesterday as the improving profit outlook of recent weeks grew more suspect with disappointing news from Disney and Hewlett-Packard.

The Dow Jones industrial average fell 61 points to about 9,128 after halving a midday deficit of 115 points.

It was the third straight losing session for the blue-chip barometer, which has now fallen 209 points from Friday's record close of 9,337.97.

Broad-market indicators also staged a semi-recovery in the afternoon, with the Standard and Poor's 500 even bobbing into positive terrain before finishing with a modest loss.

Merck led the Dow's slide for a second day after plunging nearly 10 points on Tuesday, when the drug-maker posted slightly weak second-quarter results and issued a discouraging outlook for the remainder of 1998.

The Standard and Poor's 500 fell 0.99 to 1,164.08, and the technology-heavy Nasdaq composite index fell 9.39 to 1,969.75.