Tough morning on Wall Street

NEW YORK (CNNMoney.com) -- Stocks tumbled near midday Monday, on the first full trading day after Thanksgiving, as investors bet that the recent rally was due for a rest.

The Nasdaq composite (down 39.40 to 2,420.86, Charts) lost around 1.7 percent nearly 2-1/2 hours into the session, with a variety of tech shares declining. The tech-fueled index touched a nearly six-year high last week.

The Dow Jones industrial average (down 132.75 to 12,147.42, Charts) lost around 1 percent and the broader S&P 500 (down 13.48 to 1,387.47, Charts) index lost 1 percent. Last week, the S&P 500 hit a six-year high.

The Russell 2000 (up $0.00 to $20.29, Charts), the small-cap stock benchmark, lost 1.9 percent.

Although there was no big catalyst to spark a selloff Monday, a pullback was not unexpected, with many analysts having called for a period of consolidation after the substantial run the stock market has seen seen bottoming in July.

"It's probably one of those things where there needs to be a little profit taking after the run up we've had," said Tom Schrader, co-head of listed trading at Legg Mason.

He noted that with the exception of energy, pretty much every other stock sector was down. However, the selloff was moderate, and not panicky in tone.

As of Friday's close, the Nasdaq was up 11.6 percent year-to-date and up 8.6 percent in the fourth quarter. The Dow was up 14.6 percent in 2006 and 5.1 percent since Sept. 30. The S&P 500 had risen 12.2 percent this year and 4.9 percent since the end of September.

Small caps have risen even more, with the Russell 2000 up 17.7 percent in 2006, as of Friday, and up 9.2 percent in the third quarter.

All financial markets were closed Thursday for Thanksgiving and attendance was light for Friday's shortened session.

Volume remained light on Monday, with many Wall Street professionals still driving back after the holiday, Schrader said. "I think tomorrow will be a better indicator," he said, of whether stocks were set for a bigger selloff.

One bright spot: early positive reports from retailers on "Black Friday," the day after Thanksgiving and the start of the holiday shopping period.

Reports continued to flow in over the weekend, suggesting shoppers came out in droves, although it was unclear how this would impact retailers' overall profits. (Full story).

On the downside, Wal-Mart Stores forecast over the weekend that November sales at stores open a year or more, also known as same-store sales, would fall 0.1 percent. The forecast included the "Black Friday" results. Wal-Mart (down $0.88 to $47.02, Charts), a Dow component, fell 2 percent Monday morning.

However, losses were widespread, with 26 out of 30 Dow components sliding. Other decliners included Dow tech shares IBM (down $1.52 to $91.83, Charts), Intel (down $0.45 to $21.14, Charts) and Hewlett-Packard (down $0.61 to $38.95, Charts), which all lost more than 1 percent.

Airline stocks slid in response to the rise in oil prices. Continental (down $2.43 to $42.95, Charts) lost over 4 percent and American Airlines parent AMR (down $1.52 to $32.58, Charts) lost 3.6 percent. The Amex Airline (Charts) index fell 3.7 percent.

Market breadth was negative. On the New York Stock Exchange, losers topped winners by four to one on volume of 630 million shares. On the Nasdaq, decliners beat advancers by around 7 to 2 on volume of 820 million shares.

Rising oil prices also added a sense of caution to the markets. U.S. light crude oil for January delivery rose 39 cents to $59.63 a barrel on the New York Stock Exchange.

Treasury bond prices slipped, raising the yield on the 10-year note to 4.56 percent from 4.55 percent late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped versus the euro and rose versus the yen.

COMEX gold rose $11.10 to $646.50 an ounce.

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