Stocks fell Tuesday after an unexpected drop in retail sales and producer prices tested a notion that the economy is starting to find its footing.
The poor showing for retail sales in March and a sharp drop in wholesale prices overshadowed better-than-expected profit reports from Johnson & Johnson and
Goldman Sachs Group Inc.
In midday trading, the Dow Jones industrial average fell 63.72, or 0.8 percent, to 7,994.09.
Broader market measures also lost ground. The Standard & Poor's 500 index fell 7.26, or 0.9 percent, to 851.47, and the Nasdaq composite index fell 15.74, or 1 percent, to 1,637.57.
Financial stocks showed some of the steepest losses even after Goldman's results came in well ahead of what analysts had been expecting.
Citigroup Inc. and JPMorgan Chase & Co. are also due to report quarterly results this week.
President Barack Obama and
Federal Reserve Chairman Ben Bernanke said in separate speeches Tuesday that despite some hopeful signs about the economy a sustained recovery will take time.
In a speech at Georgetown University, Obama pointed to signs of progress but said "by no means are we out of the woods."
Obama's speech and Bernanke's assertion there have been "tentative signs" of easing in the
recession appeared to keep some investors from hitting the "sell" button.
Stocks have surged for five weeks as traders bet that banks are working through some of their biggest troubles and the economy's woes aren't worsening.
Wall Street couldn't avoid disappointment over the Commerce Department's report that retail sales fell 1.1 percent in March, the biggest drop in three months. Analysts polled by Thomson Reuters had expected an increase of 0.3 percent.
In one bright spot, February retail sales were revised to show modest growth rather than the slight dip originally reported.
The Labor Department said wholesale prices tumbled 1.2 percent in March as the cost of gasoline, other energy products and food fell sharply.
The government also said businesses reduced inventories by 1.3 percent in February, close to the 1.2 percent fall that economists had been expecting. Investors are hoping businesses will be able to work through inventory and better align costs with demand.
Sean Simko, head of fixed income management at SEI Investments in Philadelphia, said the mixed data could keep a useful check on the market's advance. "The market always has a tendency to go too far too fast," he said.
Goldman unexpectedly released its results a day early on Monday, reporting after the closing bell that it earned $1.66 billion in the quarter, well above what analysts were expecting.
Goldman fell $7.16, or 5.5 percent, to $122.99 after its share offering.
Some other financial stocks also slid. JPMorgan fell $1.09, or 3.2 percent, to $32.61, while Morgan Stanley fell $1.77, or 6.6 percent, to $25.12.
In other market moves, the Russell 2000 index of smaller companies fell 8.81, or 1.9 percent, to 459.24.
About three stocks fell for every one that rose on the
New York Stock Exchange, where volume came to 667.9 million shares.
Bond prices rose, pushing the yield on the 10-year Treasury note down to 2.80 percent from 2.86 percent late Monday.
