NEW YORK (CNN/Money) -
U.S. stocks retreated Thursday as investors, worried that recent upbeat profit news won't continue, unloaded Cisco Systems, General Electric and Wal-Mart Stores.
But the decline erased less than half the gain on Wednesday, when the Nasdaq composite index posted its eighth-best advance in history.
The Nasdaq slid 45.81 points, or 2.7 percent, to 1,650.48, widening its year-to-date loss to 15.9 percent. The Dow Jones industrial average shed 104.41, or 1 percent, to 10,037.42 and is nearly flat for the year. The Standard & Poor's 500 dipped 15.84, or 1.5 percent, to 1,073.01, widening its 2002 decline to 6.5 percent.
David Sowerby, portfolio manager at Loomis Sayles, with $65 billion under management, called Wednesday's pullback a good time to buy. He expects stocks, which have generally been rising since hitting three-year lows Sept. 21, to keep gaining as corporate profits rebound and low interest rates boost economic growth.
"It's an opportunity to put money to work," Sowerby said.
But not everyone agreed, as numerous one-day rallies over the last two years have proved short-lived as investors, burned in the past, cashed in on gains.
"I am skeptical that this time will be different," Rory Robertson, chief strategist at Macquarie Holdings, said of Wednesday's rally.
Stocks fell to session losses around noon ET after the Federal Reserve said traces of anthrax were found in mail tested at an offsite mail facility. The Fed downplayed the finding, saying initial tests are often unreliable and that none of the tainted material matches the kind the FBI has labeled as suspicious.
More stocks fell than rose. On the New York Stock Exchange, declining shares topped advancing ones nearly 2-to-1 as 1.1 billion shares traded. Nasdaq losers beat winners nearly 2-to-1 as 1.7 billion shares changed hands.
In other markets, Treasury securities rose following Wednesday's big bond market selloff. The dollar slipped against the euro and yen.
Cisco slips
Early signs that companies are starting to spend money on new equipment faded for a day Thursday as Cisco Systems (CSCO: down $0.52 to $15.75, Research, Estimates) gave back some of Wednesday's 24-percent surge.
The communication equipment maker's better-than-expected profit report preceded a reassuring forecast from General Electric (GE: down $1.36 to $31.49, Research, Estimates), whose shares rallied 7 percent in the previous session.
One of the Dow's biggest decliners, Wal-Mart Stores (WMT: down $1.40 to $54.99, Research, Estimates), the world's biggest company by revenue, said sales at stores open at least a year rose 3.3 percent in April -- half the gain of the year-earlier month.
Wednesday's winners became Thursday's losers. IBM (IBM: down $2.52 to $79.93, Research, Estimates), J.P. Morgan Chase (JPM: down $1.14 to $35.77, Research, Estimates) and Microsoft (MSFT: down $2.85 to $52.12, Research, Estimates) all slipped.
Drew Cupps, portfolio manager at Cupps Capital Management, with about $50 million in assets, said he was impressed that the market didn't tumble further after Wednesday's big gain.
"It's a big move to digest," said Cupps, who predicts that investors looking for more clues about the strength of corporate spending may get few definitive answers in the weeks ahead. "We are not in an earnings period."
One NYSE trader saw little conviction in Thursday's low-volume pullback.
"If our selloffs tend to be on much lighter volume than the gains, then that's nothing to worry about," Linda Jay, trader at LaBranche & Co, told CNNfn's Market Call.
The latest economic data showed that the number of Americans filing for first-time jobless claimsfell for a third straight week, declining by 11,000 to 411,000 last week.
April's unemployment rate rose to a seven-and-a-half year high of 6 percent, the government said last week. Most economists expect joblessness to peak in the months ahead, keeping the Federal Reserve from raising interest rates until August at the earliest.
Large companies, which fueled the late 1990s bull market, are struggling. But smaller firms are having a behind-the-scenes run. The Russell 2000 index of small stocks is up 2.7 percent this year.
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