NEW YORK (CNN/Money) - U.S. stocks tumbled Thursday, as investors took a breather after their recent sprint, ditching shares of Microsoft and other companies that had given the rally legs.

The Dow Jones industrial average (down 176.93 to 8317.34, Charts) declined about 2.1 percent, while the Nasdaq composite (down 21.52 to 1298.71, Charts) and Standard & Poor's 500 index (down 13.64 to 882.50, Charts) both fell more than 1.5 percent. All three indexes had traded on both sides of breakeven throughout the first half of the session.

But analysts stressed that a pullback Thursday was necessary after such a huge runup and would probably prove only a temporary setback. The Dow had gained more than 1,250 points since hitting the lows of Oct. 9.

"This was a perfect day. The market needed a rest. People should not read any more into it than day-to-day profit taking," Kenneth Polcari, a trader at Polcari/Weicker, told CNNfn's Street Sweep. "We've had a good two-week run. Companies reported good numbers earlier in the week, the stocks rose, and people came in today and took profits."

After the close of trade, Internet retailer Amazon.com (AMZN: up $0.11 to $19.86, Research, Estimates) reported breakeven results for the third quarter, when analysts had expected a loss of 4 cents a share, due to strong sales and free shipping on certain orders. The company also said it expects to be profitable for the fourth quarter and raised its sales forecast for the period.

Friday brings few significant quarterly profit reports, while economic reports abound. Data on new and existing home sales, orders for durable goods, and the University of Michigan's report on consumer sentiment are expected.

But after a two-week run during which the Dow advanced more than 1,250 points, a few lackluster or down sessions may not be such a bad thing, some traders said.

Shares of influential software leader Microsoft (MSFT: down $1.97 to $51.23, Research, Estimates) remained a drag on the market, losing about 3.5 percent in late trade. Microsoft is one of 30 blue chips that make up the Dow industrials and is the most heavily weighted issue on the Nasdaq composite.

The stock was under pressure throughout the session after the Los Angeles Times reported that the Justice Department is probing allegations that Microsoft is still hiding technical information about its Windows operating system from competitors. Should this prove to be true, it would be a violation of key provisions Microsoft agreed to in its settlement of the antitrust case last fall.

"People are definitely taking advantage of the runup we've had in some of the most beaten-down stocks in technology, consumer and others," said Bill Roe, a portfolio manager at Melhado, Flynn & Associates. "But investors shouldn't be discouraged by this. We could see it go the other direction tomorrow."

In order to close higher for the third week in a row, stocks would need to see a little upside Friday. For the week, the Dow industrials are currently down around 5 points, the S&P 500 is down around 2 points, while the Nasdaq composite is up about 11 points.

Shares of media company and CNN/Money parent AOL Time Warner (AOL: up $1.02 to $14.55, Research, Estimates) rose after the company reported a third-quarter profit of 19 cents a share, in line with estimates but down from the revised 24 cents earned a year earlier. The company also signaled that it was on track to meet full-year 2002 results.

AOL Time Warner also announced that it will need to restate results for the last eight quarters, removing $190 million in revenue as a result of an internal review of accounting practices at its troubled America Online unit.

Standard & Poor's announced that despite the third-quarter profit report, it may still cut AOL's long-term corporate credit rating anyway, as it had previously stated, citing problems with the company's America Online unit, among other factors. The announcement didn't seem to cut too much into the rise of AOL's share price Thursday, but it may have put a damper on techs overall, some analysts speculated.

Networking stocks were among the session's gainers.

Cisco Systems (CSCO: up $0.49 to $11.75, Research, Estimates) was the subject of a positive Lehman Brothers note in which the firm said its research showed orders picked up in October. Foundry Networks (FDRY: up $1.35 to $7.60, Research, Estimates) reported a third-quarter profit of 6 cents a share, two cents better than expected and four cents better than a year earlier.

But on the downside, shares of wireless technology developer Qualcomm (QCOM: down $1.13 to $35.39, Research, Estimates) fell after Credit Suisse First Boston downgraded the stock to "underperform" from "neutral," due to increased competition in the wireless sector.

Such concerns, however, did not hold back shares of AT&T Wireless (AWE: up $1.00 to $6.45, Research, Estimates), which reported far better-than-expected results on strong customer growth.

Photographic products maker Eastman Kodak (EK: up $0.31 to $34.13, Research, Estimates) reported a higher third-quarter profit that met analysts' expectations. The company also announced it will cut 1,300 to 1,700 jobs.

"Today is just the normal sturm und drang of markets. Just like it takes a while for markets to deteriorate, it takes a while for markets to build momentum," said Scotty George, chief investment strategist at Corinthian Partners Asset Management.

"But more generally, we're seeing a follow through on a lot of the value buying that lifted us in the summer and it's creating some psychological support," George added.

Treasury prices rallied in response to the stock selling as investors took money out of equities and put it into fixed income, pushing the 10-year note yield down to 4.13 percent. Treasury prices and yields move in opposite direction.

The dollar dipped against the yen, but rose against the euro. Light sweet crude oil futures gained 2 cents to $28.20 a barrel in New York. Gold fell.

Market breadth was negative. On the New York Stock Exchange, losers topped winners nearly 10-to-7 as 1.68 billion shares changed hands. On the Nasdaq, decliners edged advancers 5-to-4 as 1.90 billion shares traded.