Stocks slipped on Friday as investors took profits following a recent surge, and energy shares drooped along with the price of oil.
With developments in Washington increasingly setting the market's direction, President Barack Obama -- who needs to persuade banks to participate in his administration's plan to fix the financial crisis -- is meeting with top bankers but has no specific agenda, a senior White House advisor said.
Bank shares had been among the leaders in the recent run-up, but Bank of America
We've come a long way in a big hurry; it makes sense that we would take a little breather, said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California.
It just looks like an unwinding of recent trends and probably some profit-taking.
The Dow Jones industrial average <.DJI> fell 121.06 points, or 1.53 percent, to 7,803.50. The Standard & Poor's 500 Index <.SPX> dropped 11.89 points, or 1.43 percent, to 820.97. The Nasdaq Composite Index <.IXIC> lost 27.59 points, or 1.74 percent, to 1,559.41.
Stocks had rallied on increasing optimism that the worst of the current downturn might be over and on government action geared at stabilizing the ailing financial system.
The recent rally has taken the broad S&P 500 index up more than 20 percent since it hit a 12-year low on March 9, although it is off nearly 10 percent for the year so far.
Heading into today's session, the S&P 500 was at its most overbought position since May 2008, according to its 50-day relative strength index.
Gains on Thursday had helped push the Nasdaq back into positive territory year-to-date but a decline in big-cap technology shares pulled the index back under on Friday.
Shares of Intel
A drop in commodities prices weighed on stocks in the materials sector, and aluminum producer Alcoa
(Editing by James Dalgleish)