Updated from 4:10 p.m. EDT

Stocks plunged to their lows of the month Thursday despite a small face-saving rally at the end of the session. A combination of uncertainties about the economy kept buyers on the sidelines after a mixed report on economic growth, while the barrage of first-quarter earnings releases continued to glow.

The Nasdaq Composite continued to lead the slide, shedding 30.76 points, or 1.55%, to 1958.78. The Dow Jones Industrial Average was down 70.33 points, or 0.68%, to 10,272.27, and the S&P 500 was down 8.53 points, or 0.76%, to 1113.88. The 10-year Treasury bond was trading down 8/32 in price to yield 4.53%, while the dollar was lower against the yen and the euro.

In heavy trading, volume on the New York Stock Exchange exceeded 1.8 billion, while nearly 2.4 billion shares changed hands on the Nasdaq. Decliners outnumbered advancers by about 7 to 2 on both markets.

"We've been going down for a full week here, and the pattern is pretty clear that selling keeps re-emerging in the afternoons," said Joe Liro, equity strategist at Stone & McCarthy Research Associates. "No one wants to carry a position overnight, and that really shows that there's a lack of conviction here to hold things up for very long.

"If we don't get a clear catalyst to push us back towards the top of this range, then I'm going to have to rethink what has been my bullish outlook on the market if we don't see an improvement over the next couple of weeks," he added.

The Nasdaq broke through its April low, an important support level, at around 1978, according to Ken Tower, chief market strategist at Cybertrader. He thinks the index has further to fall. "Now, we have the 200-day moving average that we're coming down to on the Nasdaq at about 1932, and the other probably stronger support area for the Nasdaq is the March lows around 1900," he said. "The S&P is also breaking down below its April 20 low. The Dow is the only major index clinging to that level.

At its lowest point Thursday, the Nasdaq came within 12 points of piercing its 200-day moving average of 1932.62.

"Basically, I think there's a little too much short-term optimism on the markets, and there's no compelling longer-term reason for people to invest their money," Tower added. "People are trying to figure out where the economy is going from here, and that is just not clear now."

Events in Iraq also continued to contribute to uncertainty. U.S. Marines and former Iraqi generals were negotiating a pullback of U.S. forces from Fallujah, according to the Associated Press. Elsewhere, 10 U.S. soldiers were killed -- eight of them in a car bombing south of Baghdad. Two were killed in a convoy attack in Baghdad and a roadside bombing in Baqoubah, north of the capital.

"Coming into today, the push and pull in the market has been the fact that economics and earnings have been spectacular, but you've got what's going on in Iraq weighing on the market -- not just psychologically, but also in terms of bonds' prices, higher oil prices and ultimately inflation," said Brian Pears, head equity trader at Victory Capital Management. "We're seeing more of the same today, but the wild card is how you fit the GDP report in there, and the only thing I'd say is that it's pretty backwards-looking.

"I think we're all stuck looking at the macro picture and trying to figure out how inflation and higher rates play against better economics and earnings," he added.

Semiconductor weakness weighed on the Nasdaq, with the Philadelphia Semiconductor Index down 2.6%. Meanwhile, the Amex Network index was down more than 3.5%, and the GSTI Software Index lost 2.1%.

However, health care stocks were outperforming the Dow, and gold made a comeback from big losses in the previous session, with the CBOE Gold Index closing up 1.8%.

Before trading began, the government's preliminary estimate of first-quarter gross domestic product came in at 4.2%, less than the 5% pace expected, and slightly more than the economy's showing in the fourth quarter. Meanwhile, a key inflation barometer rose at a 2.5% annualized rate in the period, up from 1.5% in the previous quarter.

"Because both the GDP deflator and the employment cost numbers were higher than anticipated, it seems to indicate that we are still likely to see a Fed increase either in the June or August time frame," said Sam Stovall, senior investment strategist with Standard & Poor's. "We're still thinking that it could happen as soon as June."

Also on the economic front, the employment cost index added 0.9% in the first quarter, after rising 0.7% in the last quarter of 2003. And the government said the number of initial weekly jobless claims fell 18,000 in the most recent week, to 338,000. Economists had expected a reading of 343,000.

Shares of Time Warner ( TWX) jumped 46 cents, or 2.8%, to $16.97 following its stellar earnings release after Wednesday's closing bell. The media giant said first-quarter earnings rose to $961 million, or 20 cents a diluted share, in the latest quarter from $396 million, or 9 cents a share, last year. Excluding an accounting change, latest-quarter earnings were 15 cents a share, up from a dime a year earlier. Revenue rose 9% to $10.1 billion. Wall Street analysts surveyed by Thomson First Call had forecast a 9-cent profit on revenue of $9.51 billion.

Time Warner also raised guidance for the full year, saying operating income before depreciation and amortization -- which the company had said previously would be in the range of high single digits to low double digits -- will now be in the low double digits.

In the stumbling technology sector, optical networker JDS Uniphase ( JDSU) posted a third-quarter operating loss of $6.7 million, or less than a penny per share, on $161 million in sales. The loss matched estimates, but the company said it would post a penny-a-share loss in the June quarter, slightly wider than expected. Its stock closed off 56 cents, or 14.5%, to $3.30.

Before Thursday's open, DaimlerChrysler AG ( DCX) reported a 33% drop in net income due to restructuring costs, higher taxes and a flawed truck-toll project in Germany. The automaker said it earned $483 million, or 48 cents a share, down from last year's profit of $723 million, or 71 cents a share. On an operating basis, earnings increased 10%. Its shares closed down 91 cents, or 2%, to $45.

Raytheon's ( RTN) first-quarter earnings rose to $128 million, or 30 cents a share, from $95 million, or 23 cents a share, a year earlier. The company earned 24 cents a share before an accounting gain, beating estimates by 3 cents a share. Its closed up 43 cents, or 1.4%, to $32.

Aetna ( AET) said its net income rose 11%, thanks to membership increases, lower medical costs and better profit margins. The health insurer reported profits of $365.8 million, or $2.28 a share, up from last year's $330 million, or $2.12 a share. Its shares closed down $4.03, or 4.6%, to $83.72. In other corporate news, Google filed to go public, revealing long-awaited plans to raise as much as $2.7 billion in an IPO and giving potential investors their first taste of the company's financial performance. According to the filing, the Internet search icon posted a profit of $105.6 million in the year ended Dec. 31, 2003, up from $99.7 million a year earlier. It had revenue of $961.9 million in the recent year, up from $347.8 million in the year-earlier period.

Overseas stocks closed uniformly lower, with London's FTSE 100 down 0.1% to 4519 and Germany's Xetra DAX down 1.4% to 4009. In Asia, Japan's Nikkei fell 0.4% to 12,004, while Hong Kong's Hang Seng lost 10.3% to 12,006.

Economic data will play a leading role again Friday, as several key reports are due out from the government. At 8:30 a.m. EDT, the Commerce Department is expected to report that personal income grew by 0.4% in March, matching the previous month's rate, while personal consumption jumped 0.7% from February's 0.2%.

At 9:45 a.m. EDT, the University of Michigan is expected to revise April's reading of its consumer sentiment index up to 94 from the previously recorded 93.2. Then at 10:00 a.m. EDT, the National Association of Purchasing Managers will report the April results of its Chicago-area manufacturing index, expected to rise from 57.6 to 60.3.

A new batch of first-quarter earnings results are also scheduled for release before Friday's open. Among the most notable companies: Procter & Gamble ( PG) is expected to report earnings of $1.08 a share, up from 96 cents a share; Keyspan ( KSE) is expected to report $1.49 a share, down from last year's $1.53 a share; and Cigna ( CI) is expected to say it earned $1.83 a share, up from last year's $1.46 a share.