Adding to the bearish case was speculation that the latest round of data lessens the chances of another Federal Reserve interest-rate cut next month.
"Though credit market turmoil will still argue for further easing in January, as does the weak Q4 factory figures in today's industrial production report with big downward revisions, the Fed will face heightened stakes given worsening inflation risks," said analysts at Action Economics.
Down more than 100 points early on, the Dow Jones Industrial Average was more recently down 46.1 points to 13,471.9, with 19 of its 30 components hit with early losses, including Intel Corp. , which slid 2.6%, and Home Depot Inc. , off 2%.
Another blue-chip, Citigroup Inc. recovered from early losses, recently up 1.7%.
Citi, the biggest U.S. bank, was downgraded by Moody's Investors Service in the wake of its plan to move about $49 billion in assets from structured investment vehicles onto its balance sheet. .
Advancing stocks on the Dow included Boeing Co. , up 1.6% and Microsoft Corp. , ahead 1.3%.
Broader indexes fell as well, with the S&P 500 dropping 4.55 points to 1,483.86.
The technology-heavy Nasdaq Composite shed the bulk of early gains, recently off 1.1 point at 2,667.39.
On the New York Mercantile Exchange, crude-oil futures fell amid concern an economic slowdown would lower demand, with crude for January delivery slipping $1.22 to $91.03 a barrel. .
Elsewhere on the NYME, gold fell $7.9to $796.1 an ounce.
Volume on the New York Stock Exchange came to 322 million, and reached 565 million on the Nasdaq. Decliners topped advancers on both exchanges, by about 2 to 1 on both exchanges.
The consumer price index reading, led by higher prices for gasoline, proved higher than the 0.7% that analysts polled by MarketWatch expected, with the core rate up 0.3%, as expected. .
Later data had the Federal Reserve reporting a slight rise of 0.3% in U.S. industrial production in November, after dropping 0.7% the month before. .
Shares of Black & Decker Corp. were off 7.3% after the power tool maker warned business conditions and an anticipated recall would dent current-quarter results.
European shares were mixed.
And in Asia, Japanese stocks led the region in a broad retreat.
U.S. stocks remained under pressure Thursday, closing mixed, though Honeywell International's earnings forecasts helping lift sentiment on industrials. The Dow ended up 41.1 points, while the Nasdaq Composite Index ended the day down 2.65 points.
By Kate Gibson