NEW YORK -- Uneasy investors opted for safety again Friday, taking profits for a second straight day and leaving the market indexes with only modest gains from Wednesday's huge rally.
The two-day selloff wasn't surprising given the triple-digit surge enjoyed by blue chips and technology stocks on Wednesday. But the drop was disappointing for investors who'd hoped the market would be able to keep more of its big advance, and that the rally signaled a longer-lived upturn.
The week ended up being another loser for the market, the third in a row for the Nasdaq composite index and the Standard & Poor's 500 index.
"It was too much, too soon," Hugh Johnson, chief investment offer for First Albany Corp., said of the week's earlier rally. "There is a message that has been coming for a long time, and that is economists and strategists are too optimistic about the outlook for the economy and earnings. The recovery is not going to come as soon as they expect, or be as strong as they expect. ... The market has gone down to reflect that."
Investors had first believed that earnings would recover in the first quarter and now their hopes for the second quarter are diminishing. Johnson said a third-quarter recovery could also prove to be more premature, optimistic thinking.
The Dow Jones industrial average closed down 97.50, or 1.0 percent, at 9,939.92. The blue chips kept about a third, or 103.37, of their 305.28-point gain from Wednesday.
The Dow ended the week down 0.7 percent.
The broader market also declined for the second straight day, and ended a third consecutive week with losses. The Nasdaq composite index fell 49.64, or 3.0 percent, to 1,600.85. The Nasdaq lost all but 27.03 of the 122.47 it surged on Wednesday.
The Nasdaq fell for the third straight week, this time losing 0.8 percent.
The Standard & Poor's 500 index on Friday declined 18.02, or 1.7 percent, to 1,054.99. After two days of selling, the S&P was left with 5.50 points of the 39.36 gained Wednesday. The S&P ended the week down 1.7 percent, which was its third straight weekly loss.
Selling has dominated Wall Street for weeks, with investors unloading shares based on companies' inability to reassure them that business is improving and profits are strengthening. Meanwhile, rallies have been short-lived rebounds because investors see little reason - other than occasional bargain hunting - to buy stocks.
Likewise, Wednesday's rally was an aberration, and investors "kind of went overboard," said Stephen Carl, principal and head of equity trading at The Williams Capital Group.
"What you have to see is continually good economic numbers, which we aren't seeing, and more positive corporate earnings, which we don't have. Until that happens on a consistent basis, people are really hesitant to jump in," Carl said.
Among Friday's losers, Cisco Systems fell 33 cents to $15.42. The network equipment maker's better-than-expected earnings, released late Tuesday, were the catalyst for Wednesday's rally.
While positive earnings reports from tech companies have the most sway with investors, the sector has been on a steady decline all year, as it is expected to be the last to emerge from recession. Year-to-date, the Nasdaq has tumbled 17.9 percent.
Other tech losers on Friday included Dell Computer, falling $1.36 to $23.88, Texas Instruments, stumbling $1.09 to $28.70 and Intel, declining $1.23 to $27.01.
Investors also pulled out of blue chips, despite the stocks' reputation for safety in bearish markets. Wal-Mart fell $1.33 to $53.66, Caterpillar retreated $1.05 to $52.81, and Citigroup stumbled $1.03 to $43.30.
The market was unimpressed by a report from the government that wholesale prices dipped by 0.2 percent in April. The decline in the Producer Price Index, which measures inflation costs before they reach consumers, was the biggest in four months.
Declining issues outnumbered advancers about 2 to 1 on the New York Stock Exchange. Volume came to 1.17 billion shares, just ahead of the 1.15 billion shares reported Thursday.
The Russell 2000 index, which tracks smaller company stocks, fell 8.66, or 1.7 percent, to 492.73. For the week, the Russell dropped 3.8 percent.
Overseas markets also fell. Japan's Nikkei stock average finished Friday down 0.9 percent, France's CAC-40 fell 1.3 percent, Britain's FTSE 100 declined 0.5 percent, and Germany's DAX index lost 1.9 percent.
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