U.S. stocks fell for a second straight week, although the shallow decline suggests increasing skepticism, but not yet a repudiation of the market’s central assumption that the global economy will continue to grow and inflation will stay tame in the developed world.

The pause shows that the trading world has quickly modulated its once-unbridled zeal for risk. Economists now think that the U.S. economy might have expanded just 1.5% or so last quarter, down from the more than 3% they thought likely when the year began. And the latest survey of global fund managers by BofA Merrill Lynch shows 51% fretting about too-loose monetary policy—the highest number in seven years—while the throng that had anticipated better profits over the next 12 months has shriveled to 19% in April, from 32% in March and 51% in February.

So far, companies have been reporting first-quarter profits that are nearly 5% better than analysts were expecting. That pales by comparison with some recent quarters, in which U.S. corporations were beating forecasts by double digits, but it still presents a triumph on paper. Too bad stockholders seem to be counting on more: Companies beating profit targets have been rewarded with a mere 0.6% gain in the following session, while those that dared miss were walloped 4%, according to preliminary data from Bespoke Investment Group.

Among the latter: Alcoa (ticker: AA) swung to a first-quarter profit, but fell short of its revenue target, and its stock was clipped by 6%. JPMorgan Chase’s (JPM) biggest quarterly take ever and a 67% profit jump has brought only a flat finish. Google’s (GOOG) profits increased 18%, while revenue grew 27%—but is a 54% jump in operating expenses a sign of an increasingly cavalier attitude toward pay and spending? The company lost $15.3 billion in market value Friday, as the stock fell 8.3%.

What matters more, of course, is whether higher commodity costs and government belt-tightening will start to crimp the confidence of both companies and consumers. Disruptions to supply chains in Japan also may have a lagged effect that won’t be fully felt until later this spring. Thomas Lee, JPMorgan’s U.S. equity strategist, trimmed his forecast for second-quarter profits for the Standard & Poor’s 500 Index to $23 from $24, and cut his full-year profit forecast by $1, to $96.50. But he noted that five of the seven macroeconomic indicators he watches have continued to improve, and that the crop of companies with net margins surpassing their prior peaks has grown to 30% from 22% a year ago. He thinks revenue growth of 9% will help net margins expand above their prior peak of 9%, toward about 11% by 2012.

“Fear is making a comeback, but the usual cycle-ending hallmarks remain absent,” notes Myles Zyblock, RBC Capital Markets’ chief institutional strategist. “Crowded long positions are being cleared rather quickly, characteristic of a world dominated by low-conviction optimists.” Main Street also remains underinvested in stocks, he adds, while the business cycle is buttressed by a healthy spread between the return on and cost of capital, and the yield curve points to earnings gains stretching into 2012.

Last week, the cost of insuring against a Greek default climbed further, amid speculation of a restructuring of Greece’s debt. But crude oil broke its three-week rise, dropping by 2.8% after Goldman Sachs suggested that prices might have gotten ahead of fundamentals. While the firm sees further upside in the long run, it argues that nascent signs of demand destruction in the U.S., elections in Nigeria and a potential ceasefire in Libya could weigh on prices in the next three to six months.

Companies continued browsing for growth, and reports surfaced Friday that Johnson & Johnson (JNJ) was in talks to buy Swiss medical-equipment-maker Synthes for about $20 billion. Even before this, merger volume had surpassed $934 billion so far this year for the biggest start since 2007, says the research firm Dealogic.

The Dow Jones Industrial Average snapped a three-week ascent, falling by 38 points, or 0.3%, to 12,342. The S&P, despite a two-week retreat, it is just 1.7% off its mid-February peak. The Nasdaq Composite Index fell 16, or 0.6%, to 2765, while the Russell 2000 Index of small stocks slipped by 6 points, or 0.7%, to 835(Source: Barrons Online).