Stocks Fall on Oil, Drug Firms, Retail Data

NEW YORK – All three major indexes ended more than 1 percent lower Thursday as investors remained cautious amid high oil prices, lagging retail sales reports and looming jobless data Friday.

The Dow Jones industrial average tumbled 114.52 points, or 1.13 percent, to close at 10,125.40. The technology-laced Nasdaq Composite Index fell 22.51 points, or 1.16 percent, to end at 1,948.52, while the broader Standard & Poor's 500 index lost 11.40 points, or 1.01 percent to close at 1,130.65.

Oil prices helped fuel the sell-off. U.S. light crude prices rose 65 cents to $52.67 after touching a record $53 a barrel earlier. A strike in OPEC member Nigeria could put some crude exports on hold and tight winter heating fuel supplies added to pressure on prices.

"Oil continues to be the big story here, and it's going to be hard for the markets to break out of a range while this continues to be a problem," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "It adds to the uncertainty in the market over earnings and the election."

Also in play Thursday were drug stocks, which performed poorly after scientists cautioned against arthritis drugs in the wake of Merck & Co.'s (MRK) recall of Vioxx last week. Pfizer Inc. (PFE) , Merck and Johnson & Johnson (JNJ) dragged down the Dow and the Standard & Poor's 500 index after the editorial in the New England Journal of Medicine (search) questioned the safety of new arthritis drugs and the adequacy of the Food and Drug Administration's (search) monitoring of drug safety. Pfizer fell 3.82 percent, or $1.19, to $29.99, while Merck slipped 2.49 percent, or 69 cents, to $30.98 and Johnson & Johnson fell 3.17 percent, or $1.83, to $55.92 on the NYSE.

"A lot of the weakness we're seeing today has a lot to do with the drug stocks," said Todd Leone, managing director of equity trading at SG Cowen Securities. "When you look at it, that's been a key mover today, and they're both Dow components."

In economic news, the number of people filing for initial U.S. jobless aid fell 37,000 to 335,000 last week despite high numbers of claims in Southeastern states struck by recent hurricanes, the government said on Thursday.

Investors will be focused on September employment data due from the Labor Department on Friday.

All eyes will be on the nonfarm payroll figure, a key indicator of the economy's health. The data is expected to show a rise of 155,000 jobs from 144,000 in the previous month, according to economists.

"This should be viewed as a positive, but I think investors are going to sit on their hands and wait until tomorrow's employment data," said Owen Fitzpatrick, head of U.S. Equity Group, Deutsche Bank Private Wealth Management.

An increase in jobs will likely improve consumer sentiment, which could lead to stronger retail spending. Results at most major retailers were mixed, with the biggest gains coming from American Eagle Outfitters Inc. (AEOS), which reported a 22.7 percent rise in same-store sales — sales at stores open at least a year. Department store chain Talbots Inc. (TLB) saw a 1.3 percent drop in same-store sales, which was actually better than the 4.0 percent drop Wall Street expected. American Eagle rose 20 cents to $37.62 on the news, while Talbots gained 20 cents to $25.99. AnnTaylor Stores Corp. (ANN) lost 7.8 percent, or $1.84, to $21.80 after the clothing retailer slashed its forecast for third-quarter profits.

Costco Wholesale Corp. (COST) climbed $1.72 to $44.65 after the company reported a 24 percent hike in earnings for the third quarter, beating Wall Street estimate by 4 cents per share. The bulk retailer also saw an 8 percent increase in same-store sales in September.

Bank of America Corp. (BAC) said it will cut an additional 4,500 jobs as part of its integration with FleetBoston Financial Corp., which it acquired earlier this year. Bank of America was up 18 cents at $45.43.

Hotel giant Marriott International Inc. (MAR) fell 80 cents to $53.02 despite posting quarterly profits that surpassed analysts' forecasts by a penny per share. The company cited strong demand and a rate increase for a 9 percent rise in quarterly revenue.

Delta Air Lines Inc. (DAL) slid 10.39 percent, or 40 cents, to $3.45 after Smith Barney analyst Daniel McKenzie said he saw a high probability that the airline, which is struggling to cut costs to avoid bankruptcy, could file for Chapter 11 by the end of the month.

Shares of Starbucks Co. (SBUX) fell 1.85 percent, weighing on the Nasdaq, after the Seattle-based coffee shop chain posted its smallest monthly same-store sales increase since May of last year as a string of hurricanes slowed traffic into its stores. Starbucks dropped 89 cents to $47.09 on the Nasdaq.

Trading in stocks was active, with 1.45 billion shares changing hands on the New York Stock Exchange and 1.74 billion shares traded on Nasdaq.

Declining stocks outnumbered those that rose by about 3 to 1 on the NYSE, while more than two stocks fell for every one that climbed on Nasdaq.

The Russell 2000 index of smaller companies was down 10.06, or 1.7 percent, at 582.60.

Overseas, Japan's Nikkei stock average fell 0.3 percent. In Europe, Britain's FTSE 100, Germany's DAX index and France's CAC-40 each fell 0.2 percent for the session.

Reuters and The Associated Press contributed to this report.