Stock prices fell sharply Thursday, slicing nearly 150 points off the Dow Jones industrial average, after weak sales at many of the country's major retailers heightened concerns about consumer spending.
The day's economic news, which also included a disquieting trade deficit figure, appeared to give investors sufficient reason to cash in some of the market's recent gains, which had pushed the Dow up more than 1,000 points since the beginning of March.
Companies including Wal-Mart Stores and Federated Department Stores said business fell in April, hurt by rising gasoline prices. Though many retail stocks had respectable gains Thursday, the reports raised worries that retail sales data due today from the Commerce Department would further suggest that the economy was weaker than previously thought.
The downturn in stocks followed a rise Wednesday that pushed the Dow to its 21st record close of the year after the Federal Reserve reiterated that inflation was its main concern despite a slowing of the economy. Thursday's sluggish retail sales and widening trade gap raised concerns that the central bank could hesitate to make a rate cut that might be necessary to prop up growth. The Fed's stance on inflation could be reinforced today by a government report on wholesale prices.
"What the Federal Reserve said yesterday is that their principal focus is on inflation, and what retail sales said today is that their focus should be on the economy," said Hugh Johnson of Johnson Illington Advisors. "Things are not good out there in economy land."
The Dow fell 147.74 points, or 1.1%, to 13,215.13, giving back five sessions' worth of gains. It was the biggest point drop in the blue-chip index since a 242-point plunge March 13.
Broader stock indicators also saw their largest one-day point declines since March 13. The Standard & Poor's 500 index lost 21.11 points, or 1.4%, to 1,491.47, falling back below the 1,500 mark that it surpassed last week for the first time since September 2000.
The Nasdaq composite index dropped 42.60 points, or 1.7%, to 2,533.74. The Russell 2,000 index of smaller-company stocks fell 16.14 points, or 1.9%, to 818.63, retreating from Wednesday's record close.
Declining issues outnumbered advancers by more than 3 to 1 on the New York Stock Exchange.
Bond yields fell on the weak economic data, with the yield on the benchmark 10-year Treasury note dropping to 4.64% from 4.67% late Wednesday.
