U.S. stock indexes clawed most of the way back from an early slide Thursday to finish mostly lower, ending a four-day winning streak for the benchmark S&P 500 index.
Losses in banks and retailers and consumer products makers offset gains in health care stocks, technology companies and elsewhere in the market as investors weighed new data showing retail sales slumped in December amid a disappointing holiday shopping season.
The Commerce Department reported that December retail sales posted their biggest drop since September 2009. Separately, the National Retail Federation issued figures showing U.S. holiday season sales were weaker than expected.
While the discouraging retail sales data initially put investors in a selling mood, the sell-off reversed course as traders had some time to reconsider how useful the two-month old data would be in forecasting consumer spending trends in coming months.
"This was a really big shock because it was a 9-year low, in terms of its move, but the market doesn't care what happened two months ago," said Randy Frederick, vice president of trading & derivatives at Charles Schwab. "The market really wants to know what's going on today, and really more importantly what to look for the next month."
The Dow Jones Industrial Average fell 103.88 points, or 0.4 percent, to 25,439.39. Earlier, the average had been down 235 points.
The S&P 500 index dropped 7.30 points, or 0.3 percent, to 2,745.73. The Nasdaq composite edged up 6.58 points, or 0.1 percent, to 7,426.95. Small-company stocks rose. The Russell 2000 index added 2.16 points, or 0.1 percent, to 1,545.11.
Slightly more stocks rose than fell on the New York Stock Exchange. Major European indexes finished mostly lower.
Investors retreated into government bonds following the weak report on U.S. retail sales, sending benchmark yields lower. The yield on the 10-year Treasury note fell to 2.65 percent from 2.70 percent late Wednesday. That yield is used to set rates on mortgages and other kinds of loans.
The Commerce Department said retail sales fell 1.2 percent in December from the previous month. Total retail sales for 2018 rose 5 percent from the previous year. Separately, the National Retail Federation, the nation's largest retail trade group, said that holiday sales increased a lower-than-expected 2.9 percent as worries about the trade war with China, the government shutdown and stock market turmoil dampened shopper spending in December.
Retailers had foreshadowed the results in the new reports earlier this month when they disclosed weak holiday season sales.
The sales data pulled shares in Macy's and other retailers lower. But those losses were tempered by midafternoon as some economists and analysts questioned whether the government shutdown and resulting delay in collecting the retail sales data had made the results an unreliable barometer of consumer spending in coming months.
Macy's fell 0.4 percent, while Amazon slid 1.1 percent. J.C. Penney bounced back to finish with a 0.7 percent gain.
Makers of consumer products also took a beating after Coca-Cola said its sales could slow this year because of the strong dollar. Coca-Cola slumped 8.4 percent.
Markets had been moving higher this week as investors became optimistic that new talks could move the U.S. and China closer to a resolution of their trade fight.
The negotiations began Monday, but key figures were set to meet Thursday and Friday in an attempt to avoid an escalation of tariffs that have raised prices for companies and consumers.
The nations are trying to hash out a deal before March 2, when the U.S. has said it would go ahead with penalties on an additional $200 billion of Chinese goods. President Donald Trump has reportedly said he's willing to let that deadline slide if talks go well.
The holiday sales data and ongoing trade woes come at a time that worries about other global economies are deepening. China's economy grew at its slowest pace in three decades last year and Europe is contending with a slowdown in growth. Germany, the biggest economy in Europe, recorded no growth in the fourth quarter, just barely avoiding a recession.
Several companies slumped on disappointing quarterly earnings or outlooks Thursday.
Fossil Group dropped 3.3 percent after reporting a global sales decline. The watchmaker cited economic weakness in several regions, along with reduced discounting and price-matching as key reasons for the weak quarter.
A surge in losses from wildfires and hurricanes helped push American International Group to a fourth-quarter loss. The insurer also reported lower investment income in the quarter. The stock lost 9 percent.
Casino operators broadly fell on concerns that the growth of online gambling could be stunted by a recent U.S. Department of Justice opinion. MGM Resorts CEO Jim Murren, on a call with investors, decried the DOJ's opinion for a broader restriction on interstate gambling. The industry is looking to online gambling and sports betting as key drivers of growth.
MGM fell 6.4 percent, Wynn Resorts dropped 2.7 percent and Las Vegas Sands slid 1.7 percent.
Cisco Systems had a better day. The maker of networking equipment gained 1.9 percent after it announced a big stock buyback and reported solid demand in its latest quarter.
U.S. benchmark crude rose 0.9 percent to settle at $54.41 a barrel in New York. Brent crude, the standard for international oil prices, gained 1.5 percent to close at $64.57 a barrel in London.
The dollar weakened to 110.49 yen from 110.99 yen on Wednesday. The euro strengthened to $1.1301 from $1.1271.
Gold slipped 0.1 percent to $1,313.90 an ounce. Silver dropped 0.8 percent to $15.53 an ounce. Copper was little changed at $2.77 a pound.
In other energy futures trading, wholesale gasoline climbed 3 percent to $1.51 a gallon. Heating oil rose 1.7 percent to $1.97 a gallon. Natural gas dropped 0.1 percent to $2.57 per 1,000 cubic feet.