NEW YORK (CNNfn) - The Dow Jones industrials closed below 10,000 for the first time in more than 10 months Friday as investors fearing higher interest rates sold the index's "old economy" stocks such as 3M, General Electric and Johnson & Johnson.
At the same time, the Nasdaq composite index fell only modestly from its record high as money stayed parked in technology stocks, which are expected to lead the economy's growth.
For the Dow, the worst may be yet to come.
"I wouldn't be surprised to see (the Dow) trend lower because markets don't trend up in a time of rising interest rates," Grace Fey, portfolio manager at Frontier Capital Management, told CNNfn.
The index of 30 blue chip stocks fell 230.51 points, or more than 2 percent, to 9,862.12, closing below 10,000 for the first time since April 6.
 During those 10-and-a-half months, the Nasdaq has jumped about 80 percent, as investors chase high-flying technology stocks that some see as impervious to tighter credit.
The Nasdaq's out-performance barely let up Friday.
The index fell just 27.15 points, or less than 1 percent, to 4,590.50, a touch below its eleventh record high of the year set Thursday.
"We are seeing money leave anything that's not technology, biotech or telecom and shifting into those very groups," John Hughes, market analyst at Shields & Co., told CNNfn.
The broader S&P 500 lost 20.20 points to 1,333.30.
Market breadth was negative, with declining stocks leading advancing ones 1,827 to 1,154 on the New York Stock Exchange, where trading volume rose to 1 billion shares. Losers beat winners 2,234 to 1,933 on the Nasdaq, where more than 1.8 billion shares changed hands.
In currency markets, the dollar rose strongly against the euro but edged lower versus the yen. Treasury securities were mixed.
Tale of two markets
The Dow is now down 3.50 percent this week and off 14 percent for the year. In contrast, the Nasdaq jumped 4 percent this week and is up nearly 13 percent in 2000. The mixed market comes as four Federal Reserve interest rates hikes since June have cemented fears that higher borrowing costs will crimp corporate profits.
And analysts expect more rate hikes ahead, especially after a government report Friday showed surprising economic strength. The Commerce Department said fourth-quarter gross domestic product soared 6.9 percent, its fastest growth in more than three years.
The news was just one more blow to the Dow's so-called "old economy" stocks, seen as sensitive to tighter credit.
"I expect the key is the Fed continues to tighten credit as we go forward," Marshall Acuff, equity strategist at Salomon Smith Barney, told CNNfn's Talking Stocks. "What this is going to mean for the profit picture is more critical for stocks."
Twenty-six of the Dow's 30 stocks fell Friday. Among the big losers, Minnesota Mining & Manufacturing (MMM: Research, Estimates) fell 5-1/2 to 85-3/4, Procter & Gamble (PG: Research, Estimates dropped 3 to 85-1/2, Johnson & Johnson (JNJ: Research, Estimates) lost 2-9/16 to 71-3/16 and General Electric (GE: Research, Estimates) dipped 3 to 128.
The day's somewhat somber mood comes in sharp contrast to that of late March of last year, when the Dow first closed above 10,000.
The market's leadership has narrowed dramatically since then to include mostly large tech stocks, leaving many investors feeling left out.
"It's only Chinese water torture to people who hold the Dow," Ken Tower, director of technical research at UST Securities, told CNNfn's Street Sweep. "For those in the Nasdaq it's an incredible party."
Over the last three months, the Nasdaq has outperformed the Dow by 42.5 percent, the widest gap on record for those two indexes, according to Markethistory.com
Some of Nasdaq's best-known high flyers rose Friday. Oracle (ORCL: Research, Estimates) gained 8-11/16 to 70-5/8, Doubleclick (DCLK: Research, Estimates) jumped 9-7/8 to 91-13/16 and Amazon.com (AMZN: Research, Estimates) climbed 11/16 to 69-1/8.
"It is as easy as selling the losers and buying the winners," said Peter Coolidge, senior trader at Brean Murray & Co., referring to the consumer products makers, industrial stocks, and drug firms that make up most of the Dow. "It's a continuation as investors are buying the successful stocks and ignoring the value stocks."
(Click here for a look at Friday's hot stocks.) 
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