NEW YORK (CNN/Money) - U.S. stocks tumbled Thursday, with investors using weakness in General Electric and financial shares as an excuse to cash in after the latest leg of Wall Street's three-month rally.

With no new economic or earnings news expected Friday, the markets may suffer more profit taking.

"It's a tough call," said Fred Sears, a portfolio manager at Investors Capital Funds. "I think you could see more selling over the next few sessions. Tomorrow's a triple-witching day and I know a lot of the hedge funds are betting on that to take stocks down."

"Triple-witching" happens when the expiration of contracts for stock index futures, stock index options and stock options all occur on the same day. The result is often increased volatility.

However, many analysts say investors may be reluctant to move too much in any direction ahead of the Federal Reserve's interest-rate-setting meeting next week.

The major indexes are currently posting a modest gain on the week, but that could turn around, depending on Friday's trade.

On Thursday, the Dow Jones industrial average (down 114.27 to 9179.53, Charts) lost 1.2 percent, the Nasdaq composite (down 28.50 to 1648.64, Charts) lost 1.7 percent, and the S&P 500 (down 15.39 to 994.70, Charts) lost 1.5 percent.

Selling was fairly broad, with 27 of 30 Dow stocks declining. European and Asian markets closed lower, while a rise in gold prices and Treasury bonds, as well as a mixed dollar, added to the negative pressure on stocks.

The major stock indexes hit new almost one-year highs Monday and have been essentially treading water since then. Thursday's selling mostly stemmed from weakness in big-cap blue chips, such as Dow stock General Electric (GE: down $0.87 to $29.86, Research, Estimates), which fell 2.8 percent after the company said its short-cycle May orders for plastics fell from a year earlier, which led to a round of negative brokerage notes.

For the second session in a row, brokerage stocks fell, with investors choosing to cash out of a number of issues despite Lehman Brothers' better-than-expected results, released before the opening of trade.

Market breadth was negative. Decliners beat advancers by around two to one on both the New York Stock Exchange and the Nasdaq. On the NYSE, 1.50 billion shares changed hands, and 1.94 billion shares traded on the Nasdaq.

General Electric said that dollar volume for its short-cycle May order for plastics fell 15 percent to 20 percent from a year earlier. It was the second most-active NYSE issue.

Following the news, J.P. Morgan, Prudential and Deutsche Bank all lowered their current-quarter or full-year earnings forecasts for the company. Additionally, Merrill Lynch cut its 2003 and 2004 earnings estimate for GE, saying it believes the company could use Friday's meeting with analysts as an opportunity to narrow current guidance.

Separately, the company said a unit of its General Electric Capital will sell its stake in shopping center owner Regency Centers (REG: up $1.99 to $34.55, Research, Estimates) for more than $1.1 billion.

Lehman Brothers (LEH: down $2.97 to $71.02, Research, Estimates) saw its shares decline 3 percent after it reported second-quarter earnings per share of $1.67, up from $1.08 a year earlier and well past the $1.17 analysts surveyed by First Call were expecting.

Lehman stock opened a little higher but quickly succumbed to profit taking, jerking the rest of the brokerage and banking stocks down along with it. Dow member Citigroup (C: down $1.12 to $43.79, Research, Estimates) lost 2.5 percent and J.P. Morgan (JPM: down $0.62 to $34.45, Research, Estimates) lost 1.8 percent.

Other big Dow decliners included Honeywell (HON: down $0.97 to $28.05, Research, Estimates), United Technologies (UTX: down $1.30 to $71.90, Research, Estimates) and McDonald's (MCD: down $0.49 to $21.56, Research, Estimates).

Shares of Forests Labs (FRX: down $7.32 to $53.29, Research, Estimates) fell 12.1 percent after it said a clinical trial of its Alzheimer's treatment didn't have a significant impact on awareness and reasoning in patients. It was one of a number of biotechs declining on the day.

The market briefly turned upward following a better-than-expected reading on weekly jobless claims and the leading economic indicators for May, before getting bogged down in the day's corporate snafus.

"You had a big run Monday, and it's been choppy since then, which is indicative of how this market's been for months," said John Hughes, a market analyst at Shields & Co.

"You want to see a little consolidation after a run. It's healthy," Hughes added. "We had some so-so news today, and that's giving people a reason to sell, but the uptrend is intact, positive breadth has been confirmed."

The day was heavy on economic reports, with morning data on weekly joblessness and leading economic indicators for May and a midday report on regional manufacturing.

The noon ET release of the Philadelphia Fed index of regional economic activity for June rose to 4.0 from negative 4.8 in May, pointing to expansion in the mid-Atlantic region. Coming on the back of a surprisingly strong New York manufacturing survey on Monday and a strong national reading two weeks ago on manufacturing in May, it added fuel to the idea that signs of economic recovery are beginning to show.

Before trading began, investors took in weekly unemployment claims, which showed that some 421,000 Americans filed for jobless benefits last week, fewer than the previous week's 434,000 and economists' expectations for 425,000. Still, the number remained well above the 400,000 benchmark that indicates contraction in the labor market. The reading has not been below 400,000 since mid-February.

The leading economic indicators reading for May, released just after trading began, proved more exciting for the market, spurring a bit of stock buying, because the index jumped a stronger-than-forecast 1 percent, compared with the previous month's 0.1 percent advance. But the enthusiasm was short-lived, with stocks retreating soon after.

Investors are paying particularly close attention to economic news this week as they are looking for hints of how the Federal Reserve may act when it meets to set interest rates next week. Economists and other market watchers widely expect the central bank to ease monetary policy but are divided as to whether it will cut rates by a quarter-percentage point or a half-percentage point.

"Potentially, it's a lose-lose situation," said Shields & Co's Hughes. "If we get a half point, it's what people have been expecting. If we get a quarter point, it might be seen as disappointing."

Bonds rose, with the 10-year note yielding 3.34 percent as it gained 6/32 of a point in price. The dollar continued to show strength against the yen, but was weaker versus the euro.

The price of gold rallied $4.00 to $361.80 an ounce in New York. Also in New York, light crude oil futures fell 26 cents to $28.51 a barrel.