U.S. stocks fell at Tuesday's start, after the government said soaring fuel prices did not hinder consumers from shopping as much as expected and Oppenheimer & Co.'s Meredith Whitney cut profit projections for Wall Street's biggest securities firms.
Lehman Brothers Holdings Inc. and Morgan Stanley plunged after Whitney said the outlook for investment banks is ``far more bleak than that reflected in the market.''
Hewlett-Packard Co., the biggest personal-computer maker, tumbled the most since January on its $13.9 billion purchase of Electronic Data Systems Corp.
Exxon Mobil Corp. and Newmont Mining Corp. slid on concern global demand for energy and raw materials are slowing.
The Standard & Poor's 500 Index lost 6.62 points, or 0.5 percent, 1,396.96 at 11:43 a.m. in New York. The Dow Jones Industrial Average lost 93.55 points, or 0.7 percent, to 12,782.76. The Nasdaq Composite Index slipped 14.51, or 0.6 percent, to 2,473.98.
The Commerce Department said retail sales excluding motor vehicles rose 0.5 percent in April, above forecasts which were expecting a 0.2 percent gain.
Federal Reserve Chairman Ben Bernanke delivered a speech in Atlanta where he said that despite some improvements, financial markets remain severely stressed.
The Labor Department reported that found import prices climbed 1.8 percent in April. In a separate report, the Commerce Department reported sales at U.S. businesses jumped 1 percent in March, the smallest gain in a year.
Hewlett-Packard made the largest purchase since the $18.9 billion takeover of Compaq Computer Corp. and will more than double its sales from computer services. Shares dropped $2.84, or 6.1 percent, to $43.99.
Electronic Data Systems shares surged 28 percent yesterday following media reports that the two companies were in advanced merger discussions and Hewlett-Packard later confirmed the talks. Shares gained 36 cents, or 1.5 percent to $24.44.
Stock indexes futures had fallen earlier on after Wal-Mart Stores Inc. , the world's largest retailer, projected earnings that will likely fall below analysts' forecasts.