"The best thing for this market is that we don't go up aggressively," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams.
NEW YORK — Wall Street's big rally fizzled — and maybe that's OK.
Analysts said Monday's pullback after a four-session surge didn't necessarily signal that traders were reconsidering their newfound optimism about financial stocks, a main driver behind last week's advance.
In fact some viewed the measured easing in stocks as reassuring following a surge of more than 9 percent in major indicators last week, more than the market has moved in some years.
"This is healthy," said Dave Rovelli, managing director of trading at brokerage Canaccord Adams in New York. "The best thing for this market is that we don't go up aggressively. A steady rise of a few up days then a down day would be a lot better than 1,000 points up."
On Monday, the Dow slipped 7.01, or 0.1 percent, to 7,216.97. The blue chips rose as much as 169 points during the session.
Stocks rose for much of the session as investors snapped up hard-hit financial shares. Comments from Federal Reserve Chairman Ben Bernanke and reassuring news from a British bank eased some worries about the overall economy and prospects for financial companies struggling with bad debt.
Bernanke said Sunday the recession would probably end this year if the government's efforts to revive the banking industry succeed. In an interview with CBS' "60 Minutes," Bernanke said fixing the economy will require getting banks to lend more freely and financial markets to work more normally again.
Britain's Barclays PLC calmed investors after saying it has been performing well in 2009. Last week, both Citigroup Inc. and Bank of America Corp., reported that their businesses were stabilizing. The good news from Citi kicked off the market's turn higher last Tuesday.
Market analysts had cautioned since the start of the rally that it could be short, and that stocks were probably not beginning a long-term recovery.
Steven Goldman, chief market strategist at Weeden & Co., said some traders had been skeptical of the rally and suspect it is the type of head-fake that can occur in bear markets. Stocks jumped 20 percent from late November to early January before giving up their gains and sliding.
After the market's recent run-up, he said, "it should be getting bumpier here as we move forward."
The Standard & Poor's 500 index fell 2.66, or 0.4 percent, to 753.89, while the tech-heavy Nasdaq composite index fell 27.48, or 1.9 percent, to 1,404.02.
The Russell 2000 index of smaller companies fell 6.73, or 1.7 percent, to 386.36.
More stocks rose than fell even as the major indicators lost ground. Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where consolidated volume came to 7.6 billion shares compared with 6.7 billion shares traded Friday.
It was "a slow bleed into the close," said Ryan Larson, senior equity trader at Voyageur Asset Management. "Nothing specific hit the pavement in terms of negative news. The market's just exhausted at this point."
"Healthy profit-taking is expected, and it happened today."
Investors also found reason to buy in the early going after finance ministers of leading industrialized countries promised over the weekend to do more to fight the global recession. The finance officials said they would help banks sweep up soured assets.
The market's tone has improved in the past week as the reports from banks led investors to reconsider their pessimistic bets. But traders still have their worries, particularly about the financial industry.
American Express Co. fell 43 cents, or 3.3 percent, to $12.66 and dragged on the financial stocks after the company said its credit card holders fell further behind on their bills in February.
The KBW Bank Index, which tracks 24 of the nation's largest banks, slipped 0.2 percent after spending much of the session higher.
Some of the hardest hit banks still showed big gains but ended off their highs.
Citigroup rose 55 cents, or 30.9 percent, to $2.33, while Bank of America rose 42 cents, or 7.3 percent, to $6.18.
David Hefty, chief executive of Cornerstone Wealth Management in Auburn, Ind., said investors have been moving in unison lately.
"Investors have a stampede mentality," he said. "They stampede in and they stampede out."
Bond prices fell Monday as investors gravitated toward stocks. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.96 percent from 2.90 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.23 percent from 0.20 percent Friday.
The dollar mostly fell against other major currencies. Gold prices also fell.
Light, sweet crude rose $1.10 to settle at $47.35 per barrel on the New York Mercantile Exchange.