Stocks sank on Thursday, led by a drop of more than 1 percent in the Nasdaq, as a downbeat brokerage comment on Chinese Internet company Baidu.com Inc. unnerved investors after record highs earlier in the day.

Earlier, a higher profit outlook from Wal-Mart Stores Inc had helped the Dow and S&P reach all-time highs.

Baidu.com, China's top Web search firm, lost 10 percent to $308.78 on Nasdaq after JPMorgan Chase & Co. predicted Baidu's third-quarter revenue will be slightly lower than estimated.

The research note undermined confidence that had driven the Nasdaq higher for four days to its best level in 6 1/2 years on the view that there will be strength in technology earnings despite the late summer credit squeeze.

Investors sold the best performers in the previous month's tech rally, pushing iPod maker Apple Inc down 2.7 percent to $162.23 and driving Blackberry producer Research In Motion Ltd. down 5 percent to $111.

U.S. Web search company Google Inc dipped 0.5

percent to $622 after hitting $641.41, another in a series of record highs earlier in the day on upgrades by several brokerages.

Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, said the news on Baidu was the main catalyst for the afternoon reversal in stocks.

It's one of the poster boys for the speculation that's been going on in Chinese stocks and also big-cap, high-flying over-the-counter tech stocks, he said. The prospect of not seeing an upside surprise, considering the rally that many stocks have had going into the numbers, just shook the trade.

The Dow Jones industrial average was down 63.57 points, or 0.45 percent, to end at 14,015.12. The Standard & Poor's 500 Index was down 8.06 points, or 0.52 percent, to finish at 1,554.41. The Nasdaq Composite Index was down 39.41 points, or 1.40 percent, to close at 2,772.20.

The Nasdaq had its worst daily percentage drop since September 7.

Earlier, the Dow had climbed to an all-time high at 14,198.10, while the S&P 500 reached an intraday record high at 1,576.09. The Nasdaq rose intraday to 2,834.00, its highest level since January 2001.

Comments from the European Central Bank Governing Council member Axel Weber that the ECB may have to raise interest rates again, given the expected pickup in inflation, added to the weaker tone.

Even with the day's decline, shares of Baidu.com are up 53 percent over the last three months and up 154 percent over the last six months.

Shares of Apple had risen 5.6 percent since last Thursday, while Research In Motion shares were up 21.4 percent in the same period, both on the Nasdaq.

Apple is up 23 percent in the last three months and up 63 percent in the last six months, while Research In Motion is up 56 percent in the last three months and up 153 percent in the last six months.

Apple started the session higher after receiving a price target increase from Goldman Sachs.

Shares of Wal-Mart, which at one point notched their biggest advance in four months, gained 2.9 percent to end at $46.90 on the New York Stock Exchange.

The outlook from Wal-Mart, the world's largest retailer, overshadowed disappointing September sales from other retailers, including Target Corp and J.C. Penney Co Inc.

Target shares fell 1.8 percent to $64.62, while shares of J.C. Penney dropped 7 percent to $63.27.

Trading was moderate on the NYSE, with about 1.52 billion shares changing hands, below last year's estimated daily average of 1.84 billion.

In contrast, on the Nasdaq, about 2.57 billion shares traded, above last year's daily average of 2.02 billion.

Declining stocks outnumbered advancing ones by a ratio of about 5 to 3 on the NYSE and nearly 7 to 3 on the Nasdaq.

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