Stocks Fall Amid Mixed Data

Stocks sank Friday as mixed economic data on retail sales, producer prices and consumer sentiment triggered caution on Wall Street after the market's heady run-up.

The blue-chip Dow Jones industrial average (search) dropped 69.26 points, or 0.7 percent, to 9,768.68, while the broader Standard & Poor's 500 Index (search) fell 8.06 points, or 0.76 percent, to 1,050.35. The technology-laced Nasdaq Composite Index (search) dropped 37.09 points, or 1.89 percent, to 1,930.26.

For the week, the Dow fell 0.4 percent, the S&P 500 sagged roughly 0.3 percent and the Nasdaq dropped 2.1 percent. Since hitting 2003 lows in March, the market has surged, leaving some investors concerned that much of the U.S. economic rebound is already factored in current stock prices.

Shares of computer chip makers and biotechnology companies were among the hardest hit as investors locked in profits on significant gains in those sectors made earlier in the week.

"People want better evidence of true strength in the future to make another wave of commitments. Right now, the markets want something extra special because of (high) valuations," said Paul Cherney, chief market analyst at Standard & Poor's Marketscope.

But strong gains in drug stocks like Johnson & Johnson (JNJ) and Merck & Co. Inc. (MRK), spurred by growing optimism about the beaten-down group, helped to stem the day's losses.

"If you get mixed news, then people think the good news is already priced in," said Edgar Peters, chief investment officer at PanAgora Asset Management Inc., which manages $11.5 billion. "There is no catalyst right now."

U.S. retail sales (search) dipped in October as auto demand dropped, the government said. The report before the bell showed a second straight month of declining consumer activity after surges in July and August.

Retail sales fell 0.3 percent after a downwardly revised 0.4 percent drop in September, the Commerce Department (search) said. The slide was slightly larger than the 0.2 percent decline expected by Wall Street. Excluding the weak autos, sales actually rose 0.2 percent, matching analysts' forecasts.

U.S. wholesale prices (search) unexpectedly posted their biggest gain in seven months in October as food prices rose and car prices spiked with the introduction of new models, according to a separate report. But stripping out those gains, prices for wholesale goods were mostly well contained.

Meanwhile, U.S. consumer confidence surged more than expected in November, market sources said Friday, boosted by recent job growth and a stronger stock market. The University of Michigan's (search) index of consumer sentiment for November raced to 93.5 in a preliminary reading, well above economists' median forecast of 91.0 and a final reading in October of 89.6.

BEA Systems Inc. (BEA) skidded $1.46, or 10 percent, to $12.64. The software company said quarterly profit rose 17 percent on higher services revenue, but key software license revenue came in lower than Wall Street estimates.

The Nasdaq Biotechnology Index sank about 4 percent, eroding virtually all of the gains it made since Tuesday.

Semiconductor-related companies like microchip production gear maker Applied Materials Inc. (AMAT), down $1.26, or 5 percent, at $23.48, eroded gains made earlier in the week. The Philadelphia Stock Exchange's semiconductor index fell 3 percent.

"Semiconductor stocks have been on a tear, and to give up some of it today is not unexpected," said Michael Palazzi, managing director of Nasdaq trading at S.G. Cowen. "You've got a situation where the drugs stocks have been a down-and-out group for some time, and there's a rotation into them."

Shares of large drugmakers extended their rally this week as investors looked favorably upon progress by Congress in developing a plan under which Medicare would provide prescription drug coverage for the elderly and disabled.

Johnson & Johnson tacked on $2.02, or 4 percent, to $52.12. Pfizer Inc. (PFE) rose 63 cents, or 2 percent, to $34.08. Merck & Co. Inc. climbed 78 cents, or 2 percent, to $46.58. Bristol-Myers Squibb (BMY) advanced 56 cents, or 2 percent, to $26.52. Eli Lilly and Co. (LLY) rallied $2.23, or 3 percent, to $71.28.

Dell Inc. (DELL) was up 22 cents at $35.86 after reporting on Thursday a 21 percent increase in third-quarter earnings, citing significant growth in key European and Asian markets. The results matched analyst expectations.

Trading was active, with about 1.3 billion shares changing hands on the New York Stock Exchange and 1.8 billion traded on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was down 8.09, or 1.5 percent, at 533.11.

Overseas, Japan's Nikkei stock average finished 1.1 percent higher Thursday. In Europe, France's CAC-40 was up 1.1 percent, Britain's FTSE 100 was up 0.6 percent and Germany's DAX index was up 0.8 percent.

Reuters and the Associated Press contributed to this report.