Tough day on Wall Street

NEW YORK (CNNMoney.com) -- Stocks slumped Thursday, with investors backing off the recent rally after the morning's strong read on new home sales raised concerns that the Federal Reserve won't cut interest rates by the end of the year, as had been hoped.

The Dow Jones industrial average (down 84.52 to 13,441.13, Charts) lost 0.6 percent. The blue-chip indicators briefly hit a fresh intraday record of 13,624.31 earlier in the day.

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The S&P 500 index (down 14.77 to 1,507.51, Charts) lost 1 percent, after briefly rising above its all-time closing high in the morning on an intraday level. The closing high of 1,527.46 was hit on March 24, 2000, near the end of the last big bull run that was sparked by the 1990s tech boom.

The tech-fueled Nasdaq composite (down 39.13 to 2,537.92, Charts) lost 1.5 percent, after having ended the previous session not far from a six-year high.

The Russell 2000 (down 12.74 to 823.80, Charts) small-cap index slumped 1.5 percent after briefly surpassing its all-time closing high on an intraday level.

Stocks rose in the morning after mostly upbeat readings on durable goods orders and new home sales. But the tone turned negative as the focus turned to what stronger economic news might mean for rate cut hopes.

A number of profit warnings weighed on technology, while cautious comments from former Fed chief Alan Greenspan on Wednesday continued to reverberate Thursday.

In addition, stocks are struggling as investors show some fatigue after the recent rally, said Donald Selkin, director of research at Joseph Stevens. Selkin said that each day this week, the stock market has started off on a positive note and ended in either mixed or negative territory, a trend that suggests the market may be setting up for more of a pullback in the short term.

"The market needs a little rest here, after seven up weeks on the Dow," Selkin said.

The Dow industrials gained for 7 weeks straight, as part of a broader run. But the major gauges are unlikely to end this week higher.

All financial markets are closed Monday for Memorial Day, and many investors and other Wall Street pros are skipping out Friday, to make a long weekend of it.

Among stock movers, Network Appliance (down $6.30 to $31.76, Charts) slumped 16.6 percent in active Nasdaq trade after warning late Wednesday that first-quarter sales and earnings won't meet estimates. The maker of computer network storage systems also reported higher quarterly earnings that met estimates on higher revenue that topped estimates.

Computer Associates (down $2.27 to $25.57, Charts) slipped 8.2 percent after warning late Wednesday that fiscal 2008 sales and earnings won't meet forecasts. The management software developer also reported a narrower fourth-quarter loss that was in line with forecasts.

Intel (down $0.70 to $21.97, Charts, Fortune 500), Advanced Micro Devices (down $0.33 to $14.88, Charts, Fortune 500), Cisco Systems (down $0.57 to $25.40, Charts, Fortune 500), Apple (down $2.20 to $110.69, Charts, Fortune 500), Oracle (down $0.41 to $18.75, Charts, Fortune 500), Sun Microsystems (down $0.23 to $5.15, Charts, Fortune 500) and Qualcomm (down $1.25 to $43.59, Charts, Fortune 500) were among the heavily traded tech stocks dragging on the broader market.

A big decline in oil and gold prices dragged down the stocks in those sectors. The Amex Oil (down 19.80 to 1,338.30, Charts) index lost 1.5 percent, while the Amex Gold Bugs (down $10.67 to $318.74, Charts) index lost over 3 percent.

Interest-rate sensitive utilities were also hit hard, with the Dow Jones utilities (down 14.33 to 513.51, Charts) index losing 2.75 percent.

Helping protect the Dow industrials from sliding as much as the Nasdaq was Boeing (up $1.85 to $97.42, Charts, Fortune 500), which advanced nearly 2 percent. Late Wednesday, the company reaffirmed that it was on track to see strong earnings and revenue growth in 2007 and 2008.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than 4 to 1 on volume of 1.77 billion shares. On the Nasdaq, decliners topped advancers by 3 to 1 as 2.39 billion shares traded hands.

Durable goods orders rose a smaller-than-expected 0.6 percent in April, however, the previous month's reading was revised higher. Additionally, the report's business spending component advanced 1.2 percent, showing a positive trend.

New home sales rose to a 981,000 annual rate in April, topping forecasts and rising from the previous month. The rise was mostly fueled by a big drop in home prices.

Stocks initially rose on the reports, particularly the housing market report, as investors breathed a sigh of relief that the economy seems to be holding up. However, if the economy is doing better, there's even less of a reason for the Federal Reserve to need to cut interest rates by the end of the year, as some have hoped.

That realization sent stocks lower.

Market participants were also reacting to Wednesday comments from Alan Greenspan, who said he's concerned that Chinese markets could see another dramatic correction following the recent run.

A 9 percent slump in the Shanghai market in late February sparked a global stock market selloff as investors worried about the outlook for growth.

On one hand, Greenspan didn't say anything surprising, said John Wilson, chief technical strategist at Morgan Keegan. However, "based on how we behaved in late February, the comments made people nervous ahead of the long weekend," he said.

Wilson said that while stocks may pull back leading into the weekend, he doesn't see any indications that a more pronounced selloff is on tap.

Treasury prices rose, recovering from early weakness. The advance lowered the yields on the 10-year note to 4.84 percent from 4.85 percent late Wednesday. Treasury prices and yields move in opposite directions.

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

U.S. light crude oil for July delivery fell $1.59 to settle at $64.18 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $9.30 to settle at $653.30 an ounce.