Stocks capped a relatively good week with a thud Friday as investors locked in profits and banks shares took a hit after a couple bank executives said March had been a tougher month than the prior two.
The Dow Jones Industrial Average lost 148.38, or 1.9 percent, to close at 7,776.18. The S&P 500 fell 2 percent and the Nasdaq dropped 2.6 percent.
This came after a two-day rally that pushed the Dow up 21 percent from its recent bottom, the index's fastest recovery of that magnitude since 1938, and left the Nasdaq in positive territory for the year.
Still, for the week, all three indexes gained, with the Dow up about 100 points since last Friday. It was the Dow's third straight up week, the longest streak since May.
Banks shares, which have helped lead the March rally, came under pressure.
After a meeting with President Barack Obama, JPMorgan CEO Jamie Dimon told CNBC that March was "a little tough."
Bank of America CEO Ken Lewis also said that March was tougher than January or February.
JPMorgan shares finished down 5.8 percent, while Bank of America lost 3.2 percent and Citigroup shed 6.8 percent.
General Motors shares continued a sharp move higher, gaining 6.2 percent as President Obama has made it clear that saving the Detroit automakers is a priority.
President Obama said Thursday evening that struggling automakers could expect some more government aid if they commit to restructuring as part of an official rescue plan due to be unveiled soon.
Google lost 1.6 percent after the search giant confirmed it would cut 200 jobs in its sales and marketing team to cut costs.
Intel shed 2.5 percent after the chip maker said it might issue up to $1 billion in stock.
KB Home shares rose 6.3 percent, even as the rest of the housing sector slipped, after the homebuilder reported its loss narrowed to $58.1 millionin the first quarter as writedowns for land values declined.
The week was dominated by news of the government's plan to help private firms buy up toxic assets from banks' balance sheets and some better-than-expected reports on housing and durable goods, which helped fuel more buzz about the market forming a bottom.
All 10 key S&P sectors finished the week positive, led by financials, up 12 percent. At the bottom of the stack was utilities, which gained just 1.5 percent.
Alcoa was the top performer on the Dow this week, up 20 percent, followed by Bank of America and JPMorgan.
Citigroup was the Dow's worst performer, ending unchanged for the week, followed by Merck and IBM .
Before the G20 meeting in London next week, UK Prime Minister Gordon Brown is on a tour to persuade the biggest economies to help get the world out of the crisis.
After a meeting with Brazilian President Luiz Inacio Lula da Silva, Brown called on the G20 to back a $100 billion expansion of trade finance to reverse a fall in exports and called for a global trade agreement.
But things took a turn when da Silva delivered the shocker that "white, blue-eyed people" were to blame for the crisis.
The morning's economic news showed a slight improvement but had little impact on the market.
Personal spending rose for a second straight month, climbing 0.2 percent in February after January's revised 1-percent increase, while income slipped 0.2 percent.
And consumer sentiment improved more than expected in March, helped by increased confidence in government efforts to rescue the financial system.
Volume was average, with 1.44 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers about 3 to 1.
On Tap for Next Week:
MONDAY: Fed's Bullard speaks
TUESDAY: Chicago PMI; consumer confidence; Fed's Plosser speaks; Earnings from Lennar, Borders
WEDNESDAY: Auto sales; weekly mortgage applications; construction spending; ISM manufacturing index; pending-home sales
THURSDAY: ECB announcement; weekly jobless claims; factory orders; Earnings from Rite Aid, RIMM
FRIDAY: March jobs report; ISM services index; Bernanke speaks
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