U.S. Stocks Drop As Retail Sales Erode

NEW YORK (MarketWatch) -- U.S. stocks fell on Friday, retreating from the prior day's explosive gains, after the government said retail sales fell a record amount in October, J.C. Penney Co. offered an outlook miss and Nokia Inc. warned of falling sales.

"The biggest hit starts with everything that's big," said Richard Hastings, consumer strategist at Global Hunter Securities.

"People have been cutting back first on the biggest ticket, which was houses. Then it spread to automobiles in a very nasty way, and is now spreading into consumer electronics [and] appliances."

Equities added to early declines as U.S. consumer sentiment edged up in early November, but remained quite low, according to a report on the University of Michigan/Reuters index. .

The Dow Jones Industrial Average declined 152.84 points to 8,682.41, off earlier lows that had the blue-chip index down nearly 200 points.

Twenty-two of the blue-chip index's 30 components posted early losses, led by Caterpillar Inc. , off 4.9%, and semiconductor giant Intel Corp. , off 4.8%.

Fronting the Dow's limited gains, Citigroup Inc. shares advanced 2.8% after the Wall Street Journal reported the bank is expected to slash at least 10,000 jobs around the globe in cuts already under way. .

The S&P 500 fell 22.59 points to 888.7, with energy shares fronting the losses among the broad market index's 10 industry groups. .

Oil futures also declined, with crude for December delivery lately off $1.43 at $56.81 a barrel. .

The Nasdaq Composite lost 44.24 points to 1,552.46, with the technology-heavy index slammed after Nokia warned cell-phone sales industry-wide will fall next year , and Sun Microsystems Inc. said it would shed as many as 6,000 workers, or up to 18% of its workforce. .

Shares of Sun declined 0.5%. .

Early volume topped 243 million on the New York Stock Exchange, and decliners outpaced advancers nearly 4 to 1. Nearly 173 million shares traded on the Nasdaq, with declining issues also topping those advancing almost 3 to 1.

Retail woes

The Commerce Department estimated U.S. retail sales fell a record 2.8% last month, worse to the 2.3% expected by economists surveyed by MarketWatch. .

Illustrating the government report were results from retailers including J.C. Penney and Nordstrom's Inc. ..

Separately, the Labor Department reported import prices fell 4.7% in October as petroleum prices dropped. .

In a speech Friday before the European Central Bank in Frankfurt, Federal Reserve Chairman Ben Bernanke said central banks around the world are ready to take additional actions to restore financial market stability. .

Freddie Mac , already a penny stock, reported a $25 billion third-quarter loss.

Overseas, Italy and Hong Kong fell into recession, though France narrowly escaped that distinction as its economy edged up 0.1% in the third quarter.

The Nikkei 225 climbed 2.7% in Tokyo and the FTSE 100 rose 3.5% in London.

U.S. stocks surged Thursday after initially falling below Oct. 10 lows. After the lows were reached, there was a wave of buying across the board that was led by oil producers. The Dow Jones Industrial Average soared 552 points, the Nasdaq Composite rose 97 points and the S&P 500 rose 58 points.

By Kate Gibson