NEW YORK – Stocks fell Wednesday as investors digested weaker-than-expected economic data and a sharp rise in crude oil prices, while a slide in Internet company shares and profit-taking in the technology sector weighed on the Nasdaq Composite index.
The Dow Jones industrial average (search) fell 52.54 points, or 0.50 percent, to 10,544.90. The Standard & Poor's 500 Index (search) was down 4.04 points, or 0.33 percent, at 1,227.16. The technology-laced Nasdaq Composite Index (search) was down 22.42 points, or 1.03 percent, at 2,149.33.
Crude futures surged as refinery recovery remained sluggish on the Gulf Coast and the government announced a sharp drawdown in the nation's oil reserves. A barrel of light crude settled at $65.09, up $1.98 on the New York Mercantile Exchange (search).
"We had the Nasdaq acting poorly all day, even when the Dow and the S&P were doing well all day," said Elliot Spar, market strategist with Ryan Beck & Co. "But breadth has gotten increasingly negative. We are just seeing technical action here and higher oil is just exacerbating the move."
The day's economic news was dim. The Federal Reserve (search) said industrial output rose a tiny 0.1 percent in August due to Hurricane Katrina, which shuttered production of petroleum and chemicals along the Gulf Coast after it. struck Aug. 28.
The Commerce Department (search) said retail sales plunged in August by the largest amount since November 2001. The 2.1 percent decline, which was two times greater than analysts expected, was due to a 12 percent drop in auto sales. Excluding cars, retail sales rose 1 percent, but much of that strength reflected a rise in gasoline prices.
In the battered technology sector, which had seen a sharp rise over the past two weeks, Baidu.com Inc. (BIDU) tumbled fell 25 percent, or $28.84, to $84.75 after Goldman Sachs and Piper Jaffray each initiated coverage of the stock with "underperform" ratings. Piper Jaffray said the stock's valuation is "off the chart." Other Internet stocks also fell, with Google Inc. dropping $8.68 to $303 and Yahoo! Inc (YHOO) losing 50 cents to $33.80.
Delta Air Lines Inc. (DAL), which filed for bankruptcy late Wednesday, slipped 9 percent to 71 cents. In the past year the stock has traded as high as $8.16. Northwest Airlines Corp. (NWAC) , which is also filed for bankruptcy protection, fell 19.1 percent to $1.87 on Nasdaq. Its shares hit $11.83 back in December.
Aerospace company Boeing Co. (BA) fell after its chief financial officer told an investor conference that plane deliveries would be delayed by its two-week old machinists' strike. Shares of Boeing edged down 1.9 percent to $64.l8.
The losses were mitigated somewhat by a strong report from Lehman Brothers Holdings Inc. (LEH) , which rose 13 cents to $112.41 after having climbed more than 2 percent earlier in the session. The Wall Street firm reported a 77 percent jump in third-quarter profits, easily surpassing Wall Street's forecasts due to record revenues in its investment banking and investment management segments. That, analysts said, was a bullish sign for the overall market.
"What we're seeing from Lehman is that market conditions improved through the summer, and that conditions are likely to continue improving," Johnson said. "That's showing up in the earnings and in the detail of their reports."
"Retailers are still taking a hit off of Best Buy's loss yesterday and now today's data is providing some more selling pressure in the sector," said Tim Heekin.
Best Buy Co. Inc. (BBY) reported earnings that fell short of Wall Street expectations on Tuesday, pushing its shares down their lowest level in almost three years. Best Buy's shares closed 7 cents higher at $44.86 on Wednesday.
The Russell 2000 index of smaller companies fell 6.78, or 1.01 percent, to 666.35.
Overseas, Japan's Nikkei stock average fell 0.52 percent. In Europe, Britain's FTSE 100 closed up 0.18 percent, France's CAC-40 was up 0.38 percent for the session, and Germany's DAX index was up 0.19 percent.
Reuters and the Associated Press contributed to this report.