Stocks Slide as Rally Fizzles; GM Jumps

Stocks fell sharply Friday, led by bank and technology issues, as investors locked in profits after a two-day winning streak.

The Dow Jones Industrial Average was down more than 1 percent. The S&P 500 and Nasdaq also declined.

This came after a two-day rally that pushed the Dow up 21 percent fron its recent bottom, the index's fastest recovery of that magnitude since 1938, and left the Nasdaq in positive territory for the year.

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.

Banks shares, which have helped lead the March rally, came under pressure.

Dow components Bank of America and Citigroup were down more than 3 percent.

General Motors shares continued a sharp move higher, gaining more than 10 percent as President Obama has made it clear that saving the Detroit automakers is a priority.

Asian stocks were mixed. In Japan, contracting consumer prices threatened deflation and a deepening recession while a larger-than-expected fall in February retail sales showed more signs of gloom.

In Europe, shares were mixed after a lower open and with fourth-quarter UK gross domestic product data worse than previously estimated.

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.

In the technology sector, Google confirmed it would cut 200 jobs in its sales and marketing team, to cut costs, showing that the recession was biting into the most robust sectors.

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 Lula da Silva sparked accusations of racism when he said "white, blue-eyed people" were to blame for the crisis.

KB Home shares rose, 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.