Stocks slumped on Wednesday after retail sales data came in worse than expected, hurting shares in the sector including Wal-Mart Stores Inc and blurring the economic outlook.
Government data showed sales at retailers fell for a second straight month in April, after a string of more upbeat reports suggested a turning point in the economic cycle.
Retail activity is a closely followed indicator, as it 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.
Shares in Wal-Mart
Return to significant growth (in retailers) is likely to be a lengthy process. The consumer has problems, and it is going to take a while to build up the kind of enthusiasm needed for a robust recovery, said Joe Arsenio, president of Arsenio Capital Management in Larkspur, California.
There is a sense that the market is overshot to the upside, relative to the day to day fundamentals, he added.
The Dow Jones industrial average <.DJI> fell 192.98 points, or 2.28 percent, to 8,276.13. The Standard & Poor's 500 Index <.SPX> lost 24.00 points, or 2.64 percent, to 884.35. The Nasdaq Composite Index <.IXIC> dropped 45.44 points, or 2.65 percent, to 1,670.48.
The U.S. stock market is retreating from a two-month long run-up that saw the S&P 500 rise almost 38 percent from 12-year lows reached in early March.
Shares of big manufacturers were also hurt, with 3M Co
IPod maker Apple Inc
On the upside, shares of drugmakers rose for a second day as analysts said investors pulled cash out of the financial and technology sectors in favor of more defensive plays.
Merck & Co Inc
Shares in Intel Corp
Shares of Intel's main competitor Advanced Micro Devices Inc
(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)