updated 4/2/2009 2:46:46 PM ET 2009-04-02T18:46:46

A wild week on Wall Street ended Friday with a bit of a thud.

Major Market Indices

The Dow finished the trading day down 148 points — but it ended the week up 497 points.

If the month ended today, the Dow would record its best monthly percentage gain — 10.10 percent — since October 2002. Even more upbeat news: For the third consecutive week, the Dow has moved up, the longest advancing streak since the three weeks ending in May 2008.

Want even more positive signs? The Dow is up 17.34 percent over the past three weeks — the largest three-week gain since Ronald Reagan was president (September 1982). And the S&P 500 has soared 20.6 percent over the past 14 trading days, its best run over that length of time since Franklin Roosevelt was president (1938).

The Dow Jones Wilshire 5000 index, which reflects nearly all stocks traded in America, ended the week up 6.2 percent. That’s a paper gain of about $600 billion.

Still, the market has a very long way to go before it can be considered to be recovering. The Dow is down 6,388.35, or 45.1 percent, from its record close of 14,164.53 reached Oct. 9, 2007.

On Friday, caution reasserted itself on Wall Street, sending stocks lower. Major market indexes fell about 2 percent, but most analysts agreed the pullback was a natural response to the market’s powerful climb this month. Financial and technology stocks led the retreat, and energy shares fell along with the price of oil.

A dip in personal incomes and a slowdown in personal spending gave investors reason to cash in some of their winnings after the Dow Jones industrial average surged 21 percent over just 13 days. Analysts said the sentiment in the market was still more upbeat than it was a month ago, but the data were a reminder that the economy and the banking system remain troubled.

“There is still a definite caution in the air,” said Doreen Mogavero, president of Mogavero, Lee & Co., a New York floor brokerage, adding that she’s noted some hesitance among her clients. “I don’t think people are completely invested yet.”

Mogavero noted that the money that has gone into the market over the last few weeks has been “short-term” in nature, which leads her to believe that most people are not convinced that the economy will soon recover.

The market has been ratcheting up and down over the past week. Analysts weren’t surprised by its retrenchments, including Friday’s, because no one expects such a weak market to move consistently higher. And many analysts believe back-and-forth trading is actually a healthy way for stocks to recover, because it reflects a conservative rather than euphoric attitude among investors.

“I wouldn’t read too much into a down Friday,” said Sam Stovall, chief investment strategist, U.S. equity research at Standard & Poor’s. “It’s simply investors taking profits.”

Still, it was too early to tell whether the big March advance might go the way of Wall Street’s year-end rally, which was more than wiped out in January and February. Although the gains of the past three weeks have been based on early signs of improvement in the banking system and the economy, those advances are vulnerable to critical economic data due next week and first-quarter earnings reports that will begin in a few weeks.

The Dow fell 148.38, or 1.9 percent, to 7,776.18. The Standard & Poor’s 500 index fell 16.92, or 2 percent, to 815.94 and the Nasdaq composite index dropped 41.80, or 2.6 percent, to 1,545.20.

For the week, the Dow is up more than 6.8 percent. The S&P 500 is up 6.2 percent and the Nasdaq is up 6 percent.

The economic reports due next week include the March employment report on Friday. Although the report is likely to show more job losses, analysts believe the market can keep rising if there are other data showing the economy is improving or at the very least stabilizing.

“While the employment report is key,” said Stuart Schweitzer, global markets strategist at J.P. Morgan Private Bank, “company earnings announcements will shed light on where we go from here because they will tell us how much more restraint companies may need to show in the future.”

On Friday, the Commerce Department said personal spending rose 0.2 percent in February, as expected, down from a 1 percent gain in January. Personal incomes fell 0.2 percent.

Disappointing announcements sapped strength from technology companies. Tech stocks had surged Thursday and briefly pushed the Nasdaq into positive territory for the year.

Internet powerhouse Google said it is laying off nearly 200 workers, and technology consulting and outsourcing firm Accenture lowered its forecast for the quarter and the year. Google fell $5.59 to $347.70, while Accenture dropped $4.30, or 13.5 percent, to $27.66.

Financial companies were mainly weak too, after President Barack Obama met with the chief executives of the nation’s largest banks. Obama and Treasury Secretary Timothy Geithner are preparing to launch a partnership with private investors to buy banks’ toxic assets.

Citigroup Inc. dropped 19 cents, or 6.8 percent, to $2.62, while JPMorgan Chase & Co. fell $1.70, or 5.8 percent, to $27.40.

Mike Stanfield, chief executive of VSR Financial Services, an Overland Park, Kan.-based securities broker-dealer, has been telling investors to shift into large-cap growth stocks and energy ahead of an economic rebound. Still, he remains cautious.

“We’re not encouraging anyone to go all in,” he said. Stanfield is telling investors to return to a more traditional mix of stocks and bonds.

Other market stats Friday:

  • The Russell 2000 index of smaller companies fell 16.30, or 3.7 percent, to 429.00.
  • For every advancing stock there were about three that fell on the New York Stock Exchange. Volume came to 1.4 billion shares.
  • The dollar was mixed against other major currencies, while gold prices fell.
  • Government bonds fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.76 percent from 2.74 percent.
  • Crude oil fell $1.96 to settle at $52.38 a barrel on the New York Mercantile Exchange.

Overseas, Britain’s FTSE 100 fell 0.7 percent, Germany’s DAX index fell 1.3 percent, and France’s CAC-40 fell 1.8 percent. Japan’s Nikkei stock average fell 0.1 percent.

The Associated Press contributed to this report.

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