NEW YORK (CNNfn) - U.S. stocks fell Friday amid concerns that the economic slowdown will take a bigger-than-expected bite out of corporate profits.
The day's data on economic growth, durable good orders and the housing market showed weakness, cooling some of the optimism that sent stocks higher this spring.
Still, as the markets begin the unofficial start of summer, the gains of the last seven weeks remain impressive. The Nasdaq composite index stands more than 37 percent above its early April low. Blue chips have joined in. The Dow Jones industrial average sits 18 percent above its late March bottom.
Analysts linked that run-up to some of the day's losses.
"Probably in the short term we're a little ahead of ourselves," Richard Cripps, chief investment strategist at Legg Mason, told CNNfn's Street Sweep. "We don't have any earnings visibility and we won't until the fourth quarter."
The day's economic data didn't help. Orders for big-ticket items fell sharply last month. Both consumer confidence and the nation's gross domestic product were revised lower. And April home sales slipped.
The data spooked some investors betting on a fast economic rebound.
"No quick recovery," said John Lonski, chief economist at Moody's Investors Service. "It's going to be a struggle for the U.S. economy to get back up to its trend rate of growth."
Ahead of the data, Federal Reserve Chairman Alan Greenspan said economic weakness persists, signaling more interest rates cuts may lie ahead.
The Nasdaq composite index fell 30.99 points, or 1.4 percent, to 2,251.03 but rose 2.4 percent on the week.
The Dow Jones industrial average shed 117.05, or 1 percent, to 11,005.37, while the S&P 500 declined 15.28, or 1.2 percent, to 1,277.89. Unlike the Nasdaq, both indexes declined on the week. The Dow shed 2.6 percent and the S&P 500 lost 1 percent.
More stocks fell than rose. Declining issues on the New York Stock Exchange topped advancing ones 1,646 to 1,380 as 817 million shares changed hands. Nasdaq losers topped winners 1,960 to 1,854 as 1.3 billion shares traded.
Trading was light ahead of the long holiday weekend. U.S. markets are closed Monday, Memorial Day.
In other markets, Treasury securities finished changed. The dollar rose against the yen and edged lower versus the euro.
Soft numbers
In the most surprising economic news, the government said orders for items such as machinery, electronics and aircraft fell 5 percent in April. Economists expected a decline of only 2 percent.
"Manufacturing is still struggling," said Steven Wood, economist at FinancialOxygen.com.
Companies whose profits are tied to orders of big ticket items fell, including Boeing (BA: down $1.87 to $63.33, Research, Estimates), General Electric (GE: down $1.45 to $49.95, Research, Estimates), and Honeywell (HON: down $1.30 to $50.20, Research, Estimates).
Earlier, the government said the economy grew at a 1.3 percent rate in the first quarter, down from its previous estimate of 2 percent growth.
Separately, the National Association of Realtors said existing home sales fell 4.2 percent in April. The University of Michigan said its consumer sentiment index for May was lower than initially reported.
The attitudes of consumers have darkened amid 14 months of falling stock prices. Rising corporate layoffs haven't helped.
On Thursday, Greenspan suggested that the economy remains weak enough to continue lowering borrowing costs.
He "left the door open to further rate cuts in the near term," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
Still, Greenspan, speaking before economists in New York, also said the Fed's five interest rate cuts should spur growth this year.
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Stock investors this spring have been banking on a turnaround. The Nasdaq this week hit a three-month high while the Dow industrials rose to their best levels since early 2000.
And weak data aside, market watchers expected some pullback following the recent gains in April and early May.
"A modest pullback in warranted," Bill Meehan, chief market analyst at Cantor Fitzgerald, told CNNfn's Street Sweep.
Sluggish spending by businesses and consumers should hurt corporate profits this quarter. Overall earnings in the second quarter are forecasts to fall, following a drop during the first three months of the year.
Another round of companies offered disappointing outlooks Friday. ADC Telecom (ADCT: down $1.69 to $8.60, Research, Estimates), which makes telecommunications equipment, reported a wider-than-expected loss in the latest quarter. The company also cut its estimates for the second half of the year.
Ditech Communications (DITC: down $6.54 to $9.99, Research, Estimates) warned that sales in the next two quarters will decline because of slumping spending on telecommunications equipment.
ADC Telecom and Ditech joined scores companies including Dell Computer, Palm and Hewlett-Packard, that have said future results will fall short.
Jim Melcher, founder and president of Balestra Capitol, doubts that the spring's stock market gains can continue. Stocks, he said, still are overvalued.
"We are just about to move into the pre-announcement season when companies start to tell you how wrong you were about earnings estimates," Melcher told CNNfn's Before Hours.
According to First Call, the pace of warnings in the current quarter is running 12 percent ahead of the first quarter's pace.
But TiVo (TIVO: up $2.71 to $11.21, Research, Estimates) rallied. The company, which provides subscription-based television services, won a patent for technology that lets users pause and record live television programs.
Alcoa (AA: up $0.65 to $43.16, Research, Estimates) was the biggest winners among the Dow industrials, where only five of 30 stocks rose. Shares of the aluminum producer had fallen since hitting a 52-week high last week. Similarly, Merck (MRK: up $0.10 to $72.60, Research, Estimates) also gained. The drug maker's declined sharply earlier this week. 
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