5-15-14 1:40 PM EDT | Email Article

By Anora Mahmudova, MarketWatch


NEW YORK (MarketWatch) -- U.S. stocks fell sharply on Thursday as investors turned risk-averse amid concerns of stalling growth in the euro zone and mixed domestic economic data, including reports on inflation and industrial production.


U.S., U.K. and German government bonds rallied depressing yields further.


The S&P 500 (SPX) fell 22 points, or 1.2%, to 1,870.08. The Dow Jones Industrial Average (DJI) dropped 193 points, or 1.2%, to 16,421.25. The Nasdaq Composite (RIXF) shed 49 points, or 1.2%, to 4,051.21.


The Russell 2000 (RUT) index of small stocks fell 16 points, or 1.4% to 1,087.20, officially entering correction territory. It is down 10% from the peak of 1,208.65, reached on March 4.


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"Today's falling prices have more to do with the weak economic data out of Europe. The picture there is so bleak that the Germany's Bundesbank is signalling underwriting monetary stimulus," said Timothy Leach, chief investment officer, at U.S. Bank Wealth Management Group.


"Our own economy is improving but very slowly. Combine that with continued tapering and it is not surprising that markets have moved sideways this year," he added.


Data on euro-zone first-quarter GDP growth rattled investors nerves after coming in at a rate of 0.2%, below the expected 0.4%.


Domestic economic reports were mixed. Economy improving faster than markets and Fed believe.


Consumer prices posted the biggest increase in April since last summer as the cost of many staples rose, making it harder for Americans to stretch their paychecks to pay for typical household expenses.


Applications for weekly unemployment benefits fell sharply for the second straight week, touching the lowest level since May 2007, but at least part of the drop probably stemmed from seasonal quirks tied to a late Easter holiday.


Manufacturers in the New York region said business improved markedly in early May, suggesting a bounce in activity has finally arrived. The Philadelphia Fed's manufacturing index retreated slightly, but not as much as forecast by analysts.


Industrial production dropped in April, as utilities output tumbled during the month.


Home builders are the most pessimistic they've been in a year, with makers of new single-family homes reporting fewer sales.


Wal-Mart, Kohl's drop after earnings miss


Retailer company stocks were in focus amid earnings results. Wal-Mart (WMT) shares fell 2.6% as the company's first-quarter profit and sales missed expectations.


Shares of Kohl's Corp. (KSS) fell 2.8% as the retailer's financial results came in below expectations.


Macy's (M), which reported on Wednesday, fell 2.6%. J.C. Penney Co. Inc. (JCP), scheduled to report after the closing bell, dropped 4.2%. Also reporting after the close is Nordstrom Inc. (JWN) with shares trading 1.6% lower.


Shares of Cisco Systems Inc. (CSCO) were up 6.9% after the computer equipment giant topped Wall Street estimates for earnings and sales.


Shares of ExOne Co. (XONE) fell 15% in late trading after the 3-D printer company posted a first-quarter loss that was bigger than analysts expected.


European stocks slip


European stocks slipped in the wake of lower-than-expected GDP data. Growth in Japan, meanwhile, outstripped expectations as the economy expanded by a robust 5.9% rate in the first quarter. But a stronger yen pulled Japanese stocks lower, leaving the Nikkei Average down 0.8%. The Shanghai Composite fell 1.1%. China's cabinet announced several measures on Thursday to "boost and stabilize" the country's foreign trade.


Across other markets, crude for June delivery (CLM4) eased around 94 cents at $101.44, while gold for June delivery (GCM4) was down $11 at $1,295. The ICE dollar index (DXY) showed the dollar falling against a basket of six rivals, to 80.05 from 80.060 in late North American trading on Wednesday.


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-Anora Mahmudova; 415-439-6400; AskNewswires@dowjones.com


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05-15-14 1340ET

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Morningstar - 2014/5/15 - UPDATE: U.S. stocks sell off; Dow in triple-digit loss
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