Stocks fell sharply Wednesday despite a slide in oil prices, as March retail sales fell short of expectations and investors anxiously eyed earnings and forecasts from a number of companies.

The Dow Jones industrial average (search) closed down 104.04, or 0.99 percent, at 10,403.93. The broader gauges also fell. The Standard & Poor's 500 index (search) lost 13.97, or 1.18 percent, to 1,173.79. The Nasdaq composite index (search) fell 31.03, or 1.55 percent, to 1,974.37.

"We're seeing pretty heavy selling across the board from hedge funds and mutual funds," said Greg Palmer, head of equity trading at Pacific Crest Securities. He said there was some caution about upcoming earnings.

"Whether companies make the number or not isn't the big issue, the issue is -- what's guidance and what's the second half? The big question is whether there's enough in the second half to justify valuations."

In economic news, retail sales rose by a modest 0.3 percent in March, according to the Commerce Department (search), the weakest showing since January, as the potential for an early Easter shopping rush was trumped by cold weather and higher fuel costs. The increase was significantly below market expectations for a 0.8 percent surge in sales.

The disappointing retail sales report was a distraction for investors, who shrugged off the sharp decline in oil futures to focus on other concerns, including first-quarter results. Wall Street was also digesting the minutes of last month's Federal Reserve meeting, trying to decide whether inflation would cause policy makers to become more aggressive with interest rate hikes. Hints of weaker consumer spending added to the alarm.

"I would've expected the market to act a little bit better based on what crude is doing," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "But with the retail numbers coming in lighter than expected, we're starting to have evidence that higher gas and fuel prices are starting to crimp the consumer, and I think the fear is that that won't change any time soon."

Crude futures sagged after the International Energy Agency forecast slower growth in oil demand this year. Traders also welcomed higher-than-expected weekly inventories from U.S. Department of Energy. Light, sweet crude for May delivery shed $1.64 to settle at $50.22 a barrel on the New York Mercantile Exchange (search ). The U.S. dollar fell against other major currencies. Gold prices rose.

Apple Computer Inc. (AAPL), the maker of iPod digital music players, also weighed on the Nasdaq, falling almost 4 percent, or $1.62 to $41.04, after a Banc of America Securities analyst said its second-quarter profit could fall short of the high end of Wall Street's estimates.

After the closing bell, Apple shares fell 0.6 percent to $40.76. The company said quarterly profit rose more than sixfold, paced by strong sales of its iPod digital music players, the Mac mini and new PowerBook notebook PCs.

"Its second quarter is traditionally its toughest quarterand these numbers are good," said Jim Fisher, vice president and senior portfolio manager of Univest Wealth Management & Trust, who oversees funds owning about 200,000 Apple shares.

The hints of a drop-off in consumer spending were exacerbated by a disappointing outlook from Harley-Davidson (HDI), which plunged 17 percent, or $9.84, to $48.93. The motorcycle manufacturer's earnings beat estimates by a penny a share, but it cut its shipment and profit forecasts for the year due to weaker sales.

"This Harley thing was a big deal today. It's suggestive of not-very-good returns, potentially, from a lot of consumer discretionaries. It's a big reaction," said Frank Husic, chief investment officer at Husic Capital Management in San Francisco. "I think it threw a real damper on things when that came out."

McDonald's (MCD) rose 32 cents to $31.22 after saying it expects first-quarter profits to come in above Wall Street estimates thanks to customer initiatives and a boost from the early Easter holiday. The fast food leader said it expects earnings of 56 cents per share, well above the average analysts estimate for profits of 42 cents per share, according to Thomson Financial.

The worst-performing sector was materials, which plunged 2.78 percent; on the Dow, aluminum producer Alcoa Inc. (AA) lost 92 cents to $30.40 and chemical maker Dupont de Nemours shed $1.36 to $48.69.

Other decliners included Caterpillar Inc. (CAT), which fell $2.79 to $88.60, troubled insurer American International Group Inc. (AIG), down $1.59 at $51.61, and Exxon Mobil Corp. (XOM), down $1.28 at $59.15. Reflecting strength in the health care sector, Merck & Co. (MRK) added 71 cents to $34.52 and Pfizer Inc. (PFE) was up 40 cents at $27.28.

Overall, trading was active, with 1.63 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.75 billion shares were traded on Nasdaq, below the 1.81 billion daily average last year.

Decliners outnumbered advancers on the New York Stock Exchange by about 12 to 5 and by about 11 to 4 on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was down 10.49, or 1.71 percent, at 602.54.

Overseas, Japan's Nikkei stock average shed 0.28 percent. In Europe, France's CAC-40 added 0.49 percent, Britain's FTSE 100 rose 0.30 percent and Germany's DAX index was up 0.77 percent.

Reuters and the Associated Press contributed to this report.