The steep pullback coming a day after a respectable gain was characteristic of the erratic sessions Wall Street has endured in recent weeks as it dealt with concerns ranging from interest rates to the health of hedge funds to, more recently, the prospects of unfavorable legislation from Washington.

Today's session, unusually devoid of economic or earnings data, began with a focus on the initial public offering of a stake in the management arm of Blackstone Group LP. The most talked-about IPO since Google Inc. went public saw the buyout shop's stock open well above the $31 a share at which it had been priced late yesterday. The stock rose $4.15, or 13.4 percent, to $35.15. Enthusiasm over Blackstone wasn't broad enough to prop up the markets, however.

LOSSES FELT THROUGHOUT WALL STREET

According to preliminary calculations, the Dow fell 185.58, or 1.37 percent, to 13,360.26. Yesterday, stocks had fluctuated before ending higher, with the Dow recovering 56 points following a 146-point tumble on Wednesday.

Broader stock indicators also dropped sharply. The Standard & Poor's 500 index fell 19.56, or 1.28 percent, to 1,502.63, and the Nasdaq composite index fell 28.00, or 1.07 percent, to 2,588.96.

The week was a rough one on the stock market. The Dow lost 2.1 percent, while the S&P 500 fell 2 percent and Nasdaq lost 1.4 percent.

Stocks, which had risen in the past 13 Fridays, lost ground even as bond yields fell. The yield on the benchmark 10-year Treasury note fell to 5.14 percent from 5.20 percent late yesterday. The dollar fell against most other major currencies, while gold prices rose.

Light, sweet crude rose 49 cents to $69.14 per barrel on the New York Mercantile Exchange.

MARKET 'A LITTLE BIT OVEREXTENDED'

Investors have been grappling with concerns about whether the economy will heat up and prompt the Federal Reserve to put off cutting, or perhaps even raising, interest rates. Also, concerns about the health of Bear Stearns hedge funds involved with subprime loans, those made to people with poor credit, have weighed on the markets.

In addition, news from Washington has shown some lawmakers are impatient with some of the vast sums Wall Street investors have generated and could look to tamp down big payouts with higher taxes. Several House Democrats today proposed an increase to the taxes paid by those who manage hedge funds and private-equity companies.

Bill Schultz, chief investment officer at McQueen, Ball & Associates, contends the pullback in stocks isn't unexpected given the sizable gains Wall Street has seen. Even with today's losses, the Dow is up 7.2 percent for the year, while the S&P 500 is higher by 5.9 percent and the Nasdaq is up 7.2 percent.

"There's a point where you need to see a pause before people get excited again. Do you commit at this point or do you wait for a pullback? There's a sense that maybe we may be a little bit overextended here," he said.

RUSSELL INDEX CHANGES ADD TO SHAKY SESSION

Today's session brought added volatility for some stocks as the Russell indexes implemented changes, adding and subtracting some names. The changes can stir some unusual trading activity as investments that track the index try to square their holdings with the latest look of an index.

Energy company Hoku Scientific Inc., headquartered in Kapolei, was removed from the index. Honolulu-based Barnwell Industries Inc., an oil firm, was added.

The Russell 2000 index of smaller companies fell 5.06, or 0.60 percent, to 834.75.

Neil Massa, senior trader at MFC Global Investment Management, contends stocks were showing volatility today in part because of the rebalancing of the Russell indexes. Even the moves among some smallcap companies can affect larger stocks, he said, as investors jockey for positions.

"I think it spills over and I think this is a little healthy pullback from the highs we've been seeing," he said.

UP NEXT: FED MEETING, HOUSING REPORTS

The session comes ahead of a busy week in which the Federal Reserve meets and in which investors will receive several readings on the housing sector and the final report on economic growth in the first quarter with release of the gross domestic product.

In corporate news, Jabil Circuit Inc., a contract electronics manufacturer, rose $1.93, or 9.1 percent, to $23.13 after its fiscal third-quarter profit excluding items such as restructuring costs topped Wall Street's estimate.

Cognos Inc., a software maker and technology consultant, forecast a fiscal second-quarter profit that fell short of Wall Street's expectations. The stock fell 52 cents to $39.10.

Taser International Inc., the stungun maker, rose 80 cents, or 6.3 percent, to $13.43 after a court dismissed a lawsuit alleging the company's product resulted in an accidental death.

Overseas, Japan's Nikkei stock average fell 0.28 percent, while the sometimes-volatile Shanghai Composite Exchange fell 3.3 percent. Britain's FTSE 100 fell 0.43 percent, Germany's DAX index fell 0.19 percent, and France's CAC-40 fell 0.11 percent.

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