The day's economic news, which also included a disappointing trade deficit figure, appeared to give investors the rationale they were looking for to cash in some of the market's recent gains. Analysts have been saying the surging stock market, which had pushed the Dow up more than 1,000 points since the beginning of March, was due for a pullback.

Companies including Wal-Mart Stores Inc., J.C. Penney Co. and Federated Department Stores Inc. said business fell in April, hurt by rising gasoline prices. Though many retail stocks had respectable gains Thursday, the reports raised worries that retail sales data from the Commerce Department Friday will suggest that the economy is slower than previously thought.

The downturn in stocks followed a rise Wednesday that pushed the Dow to its 21st record close of the year, after the Federal Reserve left interest rates unchanged and reiterated that while the economy has slowed, inflation remains the central bank's primary concern. Thursday's sluggish retail sales and widening trade gap raised concerns that, while a rate cut may be necessary to boost the flagging economy, the central bank will be loathe to make one because of inflation.

"What the Federal Reserve said yesterday is that their principal focus is on inflation, and what retail sales said today is that their focus should be on the economy," said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. "Things are not good out there in economy land."

According to preliminary calculations, the Dow Jones industrial average fell 147.74, or 1.11 percent, to 13,215.13, giving back five sessions' worth of gains. It was the biggest point drop in the Dow since a 242-point plunge on March 13.

Broader stock indicators also declined. The Standard & Poor's 500 index lost 21.11, or 1.40 percent, to 1,491.47, and the Nasdaq composite index dipped 42.60, or 1.65 percent, to 2,533.74.

Bonds rose after the weak economic data, with the yield on the benchmark 10-year Treasury note falling to 4.65 percent from 4.67 percent late Wednesday.

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