Although GDP growth was slower than Wall Street estimates, analysts said it would likely bring only a temporary reprieve from an anticipated Federal Reserve decision to raise rates. Stocks have fallen for more than two weeks on rate concerns, and the prospect of higher rates squelched a rally that began early in yesterday's session.

"I think this will allay some fears, but it might only put off a rate hike for a month or so," said Todd Leone, managing director of equity trading at SG Cowen Securities.

While the market's interest-rate nerves started the selling, the downward momentum was what took prices even lower, analysts said.

That downward trend and increased volatility may remain until the Fed meets to discuss rates Tuesday. Fed Chairman Alan Greenspan has hinted that higher rates will be needed to keep the economy from growing too fast.

The GDP rose 4.2 percent for the first three months of the year, according to the Commerce Department, up slightly from the 4.1 percent gain in the final quarter of 2003.

This was lower than the 5 percent rise expected by economists, however.

In another sign of economic growth, the Labor Department reported that new filings for jobless benefits fell last week by 18,000 to 338,000.

Analysts said the figures show that layoffs at companies are beginning to drop off somewhat.