Sellers Crash Bulls' Party

Updated from 4:16 p.m. EST

Stocks closed to the downside Thursday after facing selling pressure throughout the day, and the broad averages simultaneously finished with losses for the first time this year.

The Dow Jones Industrial Average shed 81.08 points, or 0.73%, to 10,962.36, ending a three-day stint above 11,000. The S&P 500 slipped 8.12 points, or 0.63%, to 1286.06, and the Nasdaq Composite was down 14.67 points, or 0.63%, to 2316.69.

For the Nasdaq, the selloff marked its initial losing session since the calendar turned to the new year. Both the Dow and the S&P 500 lost ground for only the second time in 2006, but their earlier declines were by less than a point.

"This is just normal profit-taking after one heck of a rally," said Al Goldman, chief market strategist with A.G. Edwards. "The advance came in the face of mixed news, including the sharp rise in oil. Despite all this we still rallied, and now we're in a very normal pause to refresh. The mood is still that the glass is half-full."

General Motors(GM Quote) was the largest decliner on the Dow, losing 3.7%. DuPont(DD Quote), Alcoa(AA Quote) and Wal-Mart(WMT Quote) were all off more than 1.6%.

The 10-year Treasury was up 5/32 in price to yield 4.41%, 3 basis points above the two-year note, while the dollar rose against the yen and euro.

"If the rally can be sustained, it will have to come from earnings," said Marc Pado, market strategist with Cantor Fitzgerald. "So far, the reports have not been good, but the big names like DuPont, Alcoa and Phelps Dodge(PD Quote) are all in the same group of basic materials and have been impacted by the hurricanes."

All three companies have reported earnings travails in recent days.

"What we need is to hear from companies that take the pulse of the consumer," Pado added. "Tech will be one of those groups. Retailers will be another."

About 1.70 billion shares changed hands on the New York Stock Exchange, with decliners beating advancers by a 5-to-3 margin. Volume on the Nasdaq was 2.01 billion, and three stocks fell for every two that rose.

"The market is just correcting what we've done over the last few sessions," said Paul Nolte, director of investments with Hinsdale Associates. "The Dow couldn't hold the 11,000, and volume hasn't picked up today. If the volume does pick up, the selloff would be more pronounced. That will be the key to figuring if the market will sustain a rally."

The Dow began Thursday up 326 points, or 3%, for the year, while the S&P 500 had risen 46 points, or 3.7%, and the Nasdaq had gained 126 points, or 5.7%.