A Big Decline As Investors Take Profits

Stocks plunged yesterday, slicing nearly 150 points off the Dow Jones industrial average after weak sales at many of the major retailers heightened concerns about a slowdown in consumer spending.

The day’s economic news, which also included a disquieting 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 that 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.

Wal-Mart Stores, J. C. Penney and Federated Department Stores all said business fell in April, hurt by rising gas prices. Though many retail stocks had respectable gains, the reports raised worries that retail sales data from the Commerce Department today would also disappoint, and suggested that the economy was slower than previously thought.

On Wednesday, the Dow reached its 21st record close of the year after the Federal Reserve left interest rates unchanged and reiterated that while the economy had slowed, inflation remained the central bank’s primary concern.

“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 economyland.”

The Dow Jones industrial average fell 147.74 points, or 1.11 percent, to 13,215.13. It was the biggest point drop in the blue-chip index since a 242-point plunge on March 13.

The Standard & Poor’s 500-stock index lost 21.11 points, or 1.4 percent, to 1,491.47, falling back below the 1,500 mark that it surpassed last week for the first time since September 2000.

The Nasdaq composite index dipped 42.60 points, or 1.65 percent, to 2,533.74.

Federated Department Stores fell $1.72, to $42.10; Wal-Mart Stores declined 18 cents, to $47.75; and J. C. Penney dropped $1.41, to $76.80.

The teenage clothing retailer Aéropostale, however, lifted its first-quarter outlook and its stock rose 6.9 percent, or $2.85, to $44.35.

The United States trade deficit soared more than 10 percent, to $63.9 billion in March, its highest level in six months, driven up by crude oil imports.

A Labor Department report that the number of laid-off workers seeking unemployment benefits fell last week failed to cheer investors, who had been expecting the decline.

Today will be another data-focused day. The Labor Department will release its Producer Price Index, a gauge of inflation at the wholesale level that is expected to reflect high energy costs.

Crude oil prices rebounded yesterday from a decline a day earlier, rising 26 cents, to $61.81 a barrel, on the New York Mercantile Exchange.

Some weak earnings reports added to the negative mood on Wall Street. Whole Foods Market, the retailer of natural and organic food, said that slowing sales growth and rising costs hurt fiscal second-quarter profits, which missed Wall Street’s expectations. Its shares dropped $4.65, to $41.15.

The benchmark 10-year Treasury note rose 6/32, to 98 29/32. The yield, which moves in the opposite direction from the price, fell to 4.64 percent, from 4.66 percent.

Following are the results of yesterday’s Treasury auction of 30-year bonds:

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