Stocks tumbled on Wednesday as a gloomy retail sales report revived recent anxiety about the economy's struggle and caused a broad sell-off that accelerated late in the session.
Sales at retailers fell for a second straight month in April, breaking a string of more upbeat reports that had suggested the economic slump was abating and fueling a two-month rally.
Investors sold off shares across the board. Retailers fell, led by a nearly 5 percent drop in Target
Retail activity is a closely followed indicator, as consumer spending accounts for roughly two-thirds of the U.S. economy. Analysts had forecast no change or even a small increase in retail sales, excluding autos.
You want to see the consumer be a strong part of the recovery and if retail sales lag, that calls into question whether we're in a recovery yet and how sustainable that recovery is going to be, said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati.
The Dow Jones industrial average <.DJI> fell 184.22 points, or 2.18 percent, to 8,284.89. The Standard & Poor's 500 Index <.SPX> lost 24.43 points, or 2.69 percent, to 883.92. The Nasdaq Composite Index <.IXIC> gave up 51.73 points, or 3.01 percent, to 1,664.19.
S&P'S SLIDE BELOW 900
The session was a stumbling block for the market after an impressive run-up that has driven the S&P 500 sharply higher. The index remains up nearly 31 percent from the bear market low hit in early March, but it was the third straight day of declines for the S&P, making it the longest slump since the rally's onset.
The S&P is off 5 percent from last Friday's recovery peak.
Wednesday's sell-off caused the S&P 500 to breach some key technical support, ending below 900 for the first time in over a week.
We are coming into a good support area in the S&P 500 on 870 to 875, which was the last breakout before the move to 930, said Elliot Spar, market strategist with Stifel Nicolaus & Co in Shrewsbury, New Jersey.
I think on Thursday,. it will try and make a stand there. If it doesn't, that's going to panic a lot of guys who got in late.
TIGHTER BELTS BRUISE RETAILERS
Shares of Wal-Mart
In more bad news for the retail sector, department-store operator Macy's Inc
Shares of Macy's slid 6.7 percent to $11.52 and Liz Claiborne plummeted 26.2 percent to $4.26.
Shares of big manufacturers also got hurt, with 3M Co
Investors also pulled cash out of the financial sector, which has helped lead the recent rally, in favor of more defensive plays, such as drugmakers.
Dow components Merck & Co Inc
Shares of AMD
Trading was active on the New York Stock Exchange, with about 1.77 billion shares changing hands, above last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.37 billion shares traded, above last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2,745 to 337, while on the Nasdaq, decliners beat advancers by about 2,294 to 395.
(Additional reporting by Ellis Mnyandu; Editing by Jan Paschal)