The latest retail figures from the Commerce Department showed a larger-than-expected 1.2% increase in sales. But while the data was evidence of an economy on sound footing, it also fed concerns that pent-up demand could drive prices higher. The Consumer Price Index, a key gauge of inflation closely watched by investors, is due out Tuesday, and the Federal Reserve may feel the need to raise interest rates by a half percentage point at the end of the month, instead of the quarter point Wall Street has been expecting. The Fed's next policy meeting is scheduled for June 29-30, with any rate decision expected on the second day.
"The benign pace of rates the market has discounted may not be the case now," Russ Koesterich, U.S. equity strategist at State Street Corp., told The Associated Press. "That doesn't really make stocks look attractive. There's no real reason to go out and sell everything you own, but no real catalyst to buy, either."
The Dow Jones industrials fell 75.37, or 0.7%, to 10,334.73. The Standard & Poor's 500 index fell 11.18, or 1%, to 1,125.29. The Nasdaq composite index fell 29.88, or 1.5%, to 1,969.99. The InformationWeek 100 took the biggest hit, falling 7.21, or 2.3%, to 312.12. The Nasdaq 100 fell 52 cents, or 1.4%, to $36.32 as more than 85.2 million shares changed hands.
Nokia fell 16 cents to $14.08 after announcing production of five new cell phones and promising to regain lost market share. The company declined to give details on its 2004 forecast.