* Worse-than-expected retail sales spur economic worry
* Financials slide after Goldman's $5 bln stock issue
* Dow off 1.7 pct; S&P 500 off 2 pct; Nasdaq off 1.7 pct
* For up-to-the-minute market news click []
(Updates with Intel shares dropping after hours, eBay
planning Skype IPO; adds volume in last two paragraphs)
By Ellis Mnyandu
NEW YORK, April 14 (Reuters) - U.S. stocks fell on Tuesday
as a surprising drop in retail sales dented hopes the
recession was abating and financial shares slid on fears that
Goldman Sachs' <GS.N> share offering could prompt others to
follow suit.
Retail sales in March snapped two months of increases and
sparked selling across the board, with the stocks of
retailers, big manufacturers, technology and energy companies
among the casualties. The S&P retail index <.RLX> fell 2.5
percent.
But the financial sector, which had recently led the stock
market's 5-week rebound from 12-year lows, took the biggest
beating by far, with the KBW Bank index <.BKX> falling 8.1
percent and the S&P financial index <.GSPF> dropping 7.7
percent.
"There is fear that other banks wanting to pay back
government funds may want to raise cash by issuing shares,"
said Ryan Detrick, senior technical strategist at Ohio-based
Schaeffer's Investment Research.
The gloomy news on retail shows that "maybe the economy
hasn't turned around as the last 5-week bounce suggested."
The Dow Jones industrial average <> dropped 137.63
points, or 1.71 percent, to 7,920.18. The Standard & Poor's
500 Index <.SPX> fell 17.23 points, or 2.01 percent, to
841.50. The Nasdaq Composite Index <> declined 27.59
points, or 1.67 percent, to 1,625.72.
INTEL DROPS LATE, BUT eBAY JUMPS
After the bell, shares of Intel Corp <INTC.O> shed 4.6
percent to $15.28 after the chip maker and a Dow component
gave no formal second-quarter revenue forecast even as it
posted stronger-than-expected first-quarter results.
[]
In regular trade, Intel ended up 0.2 percent at $16.01 on
Nasdaq.
In other technology news, eBay Inc <EBAY.O> said after the
bell it would spin off its fast-growing Skype unit, a Web
telephone service company, through an initial public offering,
ending speculation about an imminent sale.
Shares of eBay, the online auctioneer, rose more than 5
percent to $15.14 after hours. They had ended the regular
session down 1.7 percent at $14.38 on Nasdaq. []
WEAK SALES WHIP CONSUMER STOCKS
During the regular session, consumer-oriented stocks felt
the sting of the morning's unexpectedly weak retail sales
data. The stock of department store operator Macy's <M.N>
tumbled 7.3 percent to $11.99, while shares of Wal-Mart Stores
<WMT.N> , the world's biggest retailer, fell nearly 1 percent
to $51.12, and consumer goods maker Procter & Gamble <PG.N>
declined 1.6 percent to $47.25.
Shares of fast-food company McDonald's Corp <MCD.N>
declined 2.3 percent to $54.82, making the stock one of the
top drags on the Dow industrials.
Consumer spending accounts for about two-thirds of U.S.
economic activity and is a pillar of corporate profits.
In recent weeks, investor sentiment had been buoyed by
some reassuring economic reports, including some on housing,
that suggested the economic slump was abating.
In a major speech, U.S. President Barack Obama said there
were signs of recovery, but "by no means are we out of the
woods just yet." For more details see []
The sell-off halted a three-day run-up in the S&P 500, but
the benchmark index is still up 24 percent since hitting a
12-year closing low on March 9.
GOLDMAN TUMBLES ON CONCERNS
Goldman Sachs shares slid 11.6 percent to $115.11, a day
after the company said it would raise $5 billion by issuing
common stock and posted a stronger-than-expected quarterly
profit. Equity offerings are traditionally a drag due to their
dilutive effect.
Additionally, analysts said there were concerns about the
quality of Goldman's earnings.
Shares of JPMorgan <JPM.N> , due to post quarterly results
on Thursday, fell 9 percent to $30.70 and contributed the most
to the Dow's decline.
Bank of America <BAC.N> shares fell 8.4 percent to $10.09,
while shares of Wells Fargo <WFC.N>, which last week posted
surprisingly upbeat preliminary first-quarter results, slid
7.2 percent to $18.27.
On Nasdaq, shares of Apple Inc <AAPL.O> , the iPhone
maker, were a top drag, down 1.6 percent at $118.31, followed
by Web search leader Google <GOOG.O> , off 2.4 percent at
$368.91.
On the energy front, Chevron <CVX.N> ended in regular
trade down 2.1 percent at $66.58, and shares of ConocoPhillips
<COP.N> lost 1.2 percent to $39.57.
Among bright spots, shares of Johnson & Johnson <JNJ.N>
finished up 0.4 percent at $51.37 after the diversified
health-care company reported a better-than-expected profit.
[].
And in contrast to other bank stocks, Citigroup <C.N>
ended up 5.5 percent at $4.01.
Trading was active on the New York Stock Exchange, where
about 1.75 billion shares changed hands, above last year's
average daily volume of 1.49 billion. On the Nasdaq, about
2.29 billion shares traded, a tad above last year's average
daily volume of 2.28 billion.
Decliners outnumbered advancers on the NYSE by a ratio of
7 to 3, while on the Nasdaq, more than two stocks fell for
every one that rose.
(Reporting by Ellis Mnyandu; Editing by Jan Paschal)
