"It doesn't look like anything specific, just looks like selling at the end of the day. It looks like money's flowing into bonds. I don't see any real catalyst. We've been weak most of the day," said Peter Coleman, head trader at Convergex.
Treasury yields were mixed, with the 2-year yield higher around 0.75 percent and the 10-year yield lower around 1.70 percent.
"If the Fed can hike twice this year the 2-year yield is not pricing that in," Brandon Swensen, co-head of the fixed income desk at RBC Global Asset Management, said in an email.
"The front end is focusing on the strong retail sales number and pricing that into the Fed's next move while the longer end remains in sync with stocks and risk sentiment," he said. "The flatter curve fits the view of slow growth and a slow but eventually tighter Fed."
The U.S. dollar index hit its highest in three weeks and held half a percent higher, with the euro around $1.13 and the yen around 108.7 yen against the greenback. The dollar index posted its fourth positive week in the last five.
The Dow and S&P closed below their 50-day moving averages for the first time since Feb. 29.
Katie Stockton, chief technical strategist at BTIG, said in an email that the S&P 500 closing below its 50-day moving average for the first time since February "reflects weak short-term momentum."
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"Oversold conditions have returned on an intraday basis, such that Monday is likely to give way to a rebound," she said. "Regardless, the market had the opportunity for an oversold bounce this week, and its failure to take shape is a bearish development. Initial support is in the 2000 area, and a pullback of that magnitude would see an unwelcome pickup in downside volatility."
The Dow fell more than 1 percent for the week and the S&P lost half a percent, for their first three-week decline since the week ended Jan. 15. The Nasdaq composite fell about 0.4 percent for the week in its first four-week losing streak since October 2014.
U.S. crude oil futures settled down 49 cents, or 1.1 percent, at $46.21 a barrel, but held a weekly gain of nearly 3.5 percent. Earlier, Baker Hughes said U.S. oil rigs fell by 10.
"This trend we've seen since mid-February, where you got the unwind of the crowded trade, (it's currently) just more of a pause in what is an ongoing trend but not a break in either direction yet," said Aaron Clark, portfolio manager at GW&K Investment Management.
Stock index futures pared losses and U.S. stocks tried for gains in morning trade after the better-than-expected retail sales.
The SPDR S&P Retail ETF (XRT) closed nearly 1.4 percent lower for a weekly loss of 4.6 percent. The ETF posted its first four-week losing streak since last summer.
"The earnings reports I think are reflecting a bit of caution. When you look at the data broadly speaking beyond those companies I think you see a big (shift) back to spending that I think had been depressed because of the decline in the stock market," said Tony Roth, CIO at Wilmington Trust.
He said currency and Treasury markets indicated higher expectations of inflation, if not a Fed rate hike, while equity markets were "confused."
Shares of Apple eked out a 0.2 percent gain but remained around lows not seen since June 2014, after falling Thursday to close at those levels.
The iShares Nasdaq Biotechnology ETF (IBB) closed nearly 0.9 percent higher but lost about half a percent for the week.
The Dow transports closed 1.2 percent lower, nearly 3 percent lower for the week, its worst since mid-January.
"I''m not sure investors and traders even know what they are looking at right now. I think they are more concerned about not being out of the market because of the Fed," Lance Roberts, chief investment strategist at Clarity Financial, said of morning market action.
"Everybody is pretty confident at this point the Fed may not raise interest rates in June," he said.
In other economic news, the producer price index rose 0.2 percent in April.
The preliminary read on May consumer sentiment rose to 95.8. Business inventories rose a more-than-expected 0.4 percent in March.