Down day for stocks at end of up week

Wall Street tumbled Friday at the end of an otherwise upbeat week, stretching the market rally to three straight weeks, for the best run in a year.

The Dow Jones industrial average (INDU) fell 148 points, or 1.9%. The S&P 500 (SPX) index lost 17 points, or 2%. The Nasdaq composite (COMP) lost 42 points, or 2.6%.

All three major gauges rallied more than 20% in just three weeks, but Wall Street pled exhaustion Friday as investors stepped back.

Still, early week gains were enough to boost the weekly tally. The market gauges have now posted gains for three consecutive weeks, the best stretch since May of last year.

While the run could have another 10% to go, it's likely to peter out after that, said Dean Barber, president at Barber Financial Group.

"I think there is momentum here in the short run, but this is the classic bear market rally and investors need to be careful not to fall into the classic bear-market trap," Barber said.

He said that the advance has been based on hope that the recession will soon end because a lot of money has been thrown at the financial sector and the economy. However, fundamentally, the economy remains in bad shape, as do the state of corporate profits.

Financial and technology shares, which led the advance on Thursday, led the retreat on Friday. But declines were broad based and 24 of 30 Dow stocks fell.

President Obama met Friday with executives from JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and other large banks to discuss the financial crisis.

The bankers gave their approval of Treasury's plan to strip bad assets off bank balance sheets. They also discussed the Obama administration's recent proposal to overhaul the financial regulation system.

On the downside, executives at JPMorgan and BofA said that March business conditions weakened after a more encouraging start to the year.

Upbeat comments about the first two months of the year from a number of executives at the nation's largest banks helped fuel the recent advance.

Rapid rally: Since falling to more than 12-year lows on March 9, the Dow has gained 18.8% and the S&P 500 had gained 20.6% as of Friday's close. Also on March 9, the Nasdaq touched a more than six-year low. Since then, it has gained 21.8%.

Better-than-forecast economic reports on housing and durable goods orders this week have added to hopes that the economy is closer to turning around. Investors have also responded well to the latest plans from the government to stabilize the financial system.

On Thursday, Treasury Secretary Tim Geithner outlined a huge overhaul of the regulatory system. On Monday, he detailed plans to purge bank balance sheets of up to $1 trillion in bad debt that is limiting lending.

Economic news: Personal income fell 0.2% in February after rising 0.2% in January. Economists surveyed by Briefing.com thought it would fall 0.1%. Personal spending rose 0.2% in February after rising 1% in January. Economists thought it would rise 0.2%.

The University of Michigan consumer sentiment index rose to 57.3 in March from 56.3 in February, versus economists' forecasts for a reading of 56.8.

Company news: Google (GOOG, Fortune 500) said late Thursday that it was cutting just under 200 sales and marketing positions worldwide. It is the second round of layoffs in Google history.

General Motors (GM, Fortune 500) shares gained on published reports that the government could extend the automaker's restructuring deadline, giving it more time to gain concessions from unions and qualify for more taxpayer help.

The Wall Street Journal said that the government could extend the March 31 deadline by 30 days. On Thursday, GM said that 12% of its U.S. workforce has taken its latest buyout offer. However, the company is still looking to work with the union to alter retiree health care benefits, among other things.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to one on volume of 1.44 billion shares. On the Nasdaq, decliners topped advancers by almost three to one on volume of 2.12 billion shares.

Bonds: Treasury prices fell, raising the yield on the benchmark 10-year note to 2.76% from 2.73% Thursday. Treasury prices and yields move in opposite directions.

Lending rates declined. The 3-month Libor rate fell to 1.22% from 1.23% Thursday, according to Bloomberg.com. The overnight Libor rate fell to 0.28% from 0.29%. Libor is a bank-to-bank lending rate.
0:00 /02:39Life in the pits

Other markets: In global trading, Asian markets mostly ended higher and European markets ended lower.

In currency trading, the dollar gained against the euro and fell against the yen.

U.S. light crude oil for May delivery fell $1.96 to settle at $52.38 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $16.90 to settle at $925.30 an ounce.