Wall Street feared that the sharp increase in the Producer Price Index, which rose 1.7 percent in October after a 0.1 percent hike in September, would either eat into fourth-quarter profits or be passed on to consumers, with the latter possibility spurring inflation.

The 1.7 percent increase in the PPI was the largest since January 1990. Without energy and food costs, which vary widely from month to month, "core" wholesale prices climbed in October by 0.3 percent for the second month in a row, the Labor Department reported.

"The PPI really wasn't that surprising. We knew energy prices were up and would start to affect wholesale prices, so that's nothing new," said Brian Belski, market strategist at Piper Jaffray. "Given that we've had a very strong move up in prices over the past few weeks, the fact that we're taking a rest here today isn't a bad thing."

According to preliminary calculations, the Dow Jones industrial average fell 62.59, or 0.59 percent, to 10,487.65. It was the Dow's largest single-session drop since Oct. 22, right before Wall Street's three-week run upward began.

Broader stock indicators were moderately lower. The Standard & Poor's 500 index was down 8.38, or 0.71 percent, at 1,175.43, and the Nasdaq composite index dropped 15.47, or 0.74 percent, to 2,078.62.

While oil prices have retreated in recent weeks, the lingering effect of October's $55-per-barrel highs may be felt through the rest of the year by businesses and consumers. However, prices have fallen sharply in recent weeks, giving hope to some stability in energy costs through the winter. A barrel of light crude was quoted at $46.11, down 76 cents on the New York Mercantile Exchange.

Analysts argued that mediocre forecasts for fourth quarter earnings, especially among retailers, has made investors more cautious after three weeks of exuberant buying.

"We had a very nice run, but now I think the market's a little overbought," said Chris Johnson, manager of quantitative analysis at Schaeffer's Investment Research. "The surge is certainly out of the way now, so it's going to be left to fundamentals, and those are pretty lackluster right now. There's nothing there to really blow your hair back."

Wal-Mart lost 81 cents to $56.89 after meeting Wall Street's profit expectations, posting a 12.7 percent increase in third-quarter profits and earning 54 cents per share. However, the company's third-quarter sales figures were below analysts' estimates.