US Markets

S&P 500 snaps 4-day winning streak after worst retail sales drop in about a decade

'We’re in for some rough sledding'—Watch five Wall Street experts explain where stocks are headed
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'We’re in for some rough sledding'—Watch five Wall Street experts explain where stocks are headed

The  and Dow Jones Industrial Average closed lower on Thursday following the release of much weaker-than-expected retail sales data.

The S&P 500 dipped 0.27 percent to 2,745.72 as the consumer staples and financials sectors lagged. The 30-stock Dow pulled back 103.88 points to 25,439.39 as shares of Coca-Cola had their worst day since 2008. The Nasdaq Composite, however, eked out a gain of 0.1 percent to close at 7,426.95 as Netflix's stock climbed more than 2 percent.

Retail sales fell 1.2 percent in December, marking their biggest monthly drop since September 2009, according to The Commerce Department. The department also said retail sales fell 0.9 percent in December when excluding gasoline station sales.

"This number was terrible," said Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a note. "The US consumer is holding the global economy on its shoulders. After seeing today's data, we better hope it was a one month outlier and that the rebound in stocks in January and month to date will revive consumer spending."

Trader on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters

Treasury yields also fell on the weak data. The benchmark 10-year rate traded around 2.66 percent, down from about 2.69 percent.

The U.S. dollar also fell against other major currencies. The euro rose 0.3 percent to $1.1294 against the dollar, while the yen gained 0.2 percent.

Lael Brainard, a Federal Reserve governor, told CNBC on Thursday that downside risks to the economy "have definitely increased."

The data come amid ongoing the U.S.-China trade talks. President Donald Trump said Wednesday that talks were "going very well" as both sides look to reach an agreement before an early March deadline. On Thursday, Bloomberg News reported Trump may be willing to extend the deadline by 60 days.

Furthermore, the South China Morning Post reported that Chinese President Xi Jinping will meet with U.S. delegates on Friday, including Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer.

Stocks are on track to post solid gains this week. The three major indexes are all up at least 1 percent through Thursday's close.

"A lot of people, including myself, think a trade will get accomplished," said Ryan Nauman, market strategist at Informa Financial Intelligence. "The fact that President Trump is potentially willing to extend that deadline is good news that a trade deal will get done. It's just a matter of when."

—CNBC's Silvia Amaro contributed to this report.