NEW YORK — Investors are looking at the economy more skeptically.
Stocks retreated more than 2 percent Wednesday and bond prices rose after two reports suggested the economy is not bouncing back as quickly as investors had hoped.
The Commerce Department said retail sales unexpectedly fell in April for the second straight month, while Realty Trac reported a troubling rise in home foreclosures.
Investors are mindful that the Dow Jones industrial average spiked 31 percent from its early-March lows — the biggest jump in such a short span since the 1930s. After Wednesday’s decline, the index is still up 26.5 percent from March 9, but investors are wondering if the market will see a sharper pullback.
Analysts say a drop of 10 percent from the market’s recent peak would hardly be surprising, especially since recent economic readings have failed to beat forecasts.
“Overall, it’s just a market that’s due for a pause, due for a pullback, due for consolidation,” said Quincy Krosby, chief investment strategist for the Hartford. “You don’t want markets to skyrocket. The higher you go, the deeper you fall.”
Few analysts, however, anticipate the stock market to sink lower than it did in March.
“What we’ve done over the past month and a half is remove this idea of Armageddon,” said Charlie Smith, chief investment officer at Fort Pitt Capital.
The Dow fell 184.22, or 2.2 percent, to 8,284.89.
Broader stock indicators sank more sharply. The Standard & Poor’s 500 index fell 24.43, or 2.7 percent, to 883.92, while the Nasdaq composite index declined 51.73, or 3 percent, to 1,664.19.
The decline put the S&P 500, a widely used barometer for mutual funds and professional investors, back into the negative column for the year to date. The S&P had edged above that level May 4.
More economic data are on the way this week. Nicholas Colas, chief market strategist at BNY ConvergEx, said today’s weekly unemployment-claims report is weighing on the market. The release will be the first to fully incorporate plant closings at Chrysler — making it a “real wild card,” he said.
“As a trader,” he said, “do you want to build positions ahead of the number?”
Financial stocks once again drove the market. The KBW Bank Index, which tracks 24 of the nation’s largest banks, fell 6.5 percent.
