Stocks tumbled on Tuesday as an unexpected drop in March retail sales suggested that the economic slump was far from abating and as Goldman Sachs slid sharply after a stock offering.

Casualties in the broad sell-off also included such economically sensitive plays as energy shares, big manufacturers, retailers and technology stocks.

But financials took the biggest beating by far, with the KBW Bank index <.BKX> falling 5.5 percent and the S&P financial index falling 5.3 percent.

We haven't seen economic news actually turn positive yet, said Dan Faretta, senior market strategist at Lind-Waldock, a retail brokerage firm, in Chicago. We're still seeing bad numbers. They're not just as bad as they were three or four months ago. Fundamentally the economy has not turned around.

The Dow Jones industrial average <.DJI> shed 133.89 points, or 1.66 percent, to 7,923.92. The Standard & Poor's 500 Index <.SPX> dropped 15.89 points, or 1.85 percent, to 842.84. The Nasdaq Composite Index <.IXIC> declined 30.00 points, or 1.81 percent, to 1,623.31.

President Barack Obama said there were signs of recovery, but by no means are we out of the woods just yet.

Shares of Goldman Sachs slid 9.3 percent to $118.02, a day after the company said it would raise $5 billion by issuing common stock. Such equity offerings are traditionally a drag due to their dilutive effect.

Goverment data showing that retail sales in March snapped two months of increases sparked selling in such consumer-oriented stocks as Wal-Mart Stores , off 1.3 percent to $50.85, Home Depot Inc , down almost 3 percent to $25.22.

Shares of fast-food company McDonald's Corp declined 2.5 percent to $54.68, making the stock one of the top Dow drags.

Shares of JPMorgan , due to post quarter results on Thursday, dropped 6.5 percent to $31.51, while among energy shares, Chevron declined 2.5 percent to $66.29.

On Nasdaq, shares of Apple Inc , the iPhone maker, were a top drag, down 2.2 percent to $117.48.

The financial sector had surged in recent weeks after some major banks said they had made money in the first two months of the year, spurring hopes that some stabilization may be returning in the battered sector.

(Editing by Jan Paschal)