Retail Sales Figures, Oil Prices Push Stocks Lower

Stocks slumped Thursday as disappointing retail sales and another rise in oil prices gave some investors an excuse to take profits after the market’s sharp recent gains.

Some key indexes suffered their largest one-day declines in more than two months, and losers outnumbered winners by more than 2 to 1 on the New York Stock Exchange and on Nasdaq.

The selling may have been spurred in part by investor caution ahead of today’s government report on July employment trends, and ahead of the Federal Reserve’s meeting Tuesday, analysts said.

The Dow Jones industrial average fell 87.49 points, or 0.8%, to 10,610.10.

The broader Standard & Poor’s 500 index dropped 9.18 points, or 0.7%, to 1,235.86.

The technology-heavy Nasdaq composite, which has outpaced the Dow and the S&P; in recent months, slid 25.49 points, or 1.2%, to 2,191.32 -- its worst one-day loss since it fell 1.3% on June 3.

The Russell 2,000 small-stock index dropped 1.7%.

In other markets, bond yields edged higher and the euro rose to its best level since May against the dollar.

Many of the nation’s retailers reported only modest July sales gains as hot weather stifled demand for fall fashions and as many consumers spent their money at auto dealers instead of malls.

The sales data raised fresh fears that consumers might finally be feeling the pinch from high gasoline prices.

Those concerns were exacerbated by another rise in oil prices. Near-term crude futures in New York added 52 cents to $61.38 a barrel. The record closing high was $61.89 on Tuesday.

Still, some investors said the stock market’s give-back wasn’t surprising, given the powerful rally since late April.

“The market’s had such a good run in the last few months and people are looking around going, ‘Where do we go from here?’ ” said Sam Rahman, who helps manage $1.6 billion at Baring Asset Management in Boston.

Stocks have been stoked in recent weeks by strong second-quarter earnings reports and by mostly upbeat economic data. But the good news on the economy also has pushed bond yields higher on the expectation that the Fed would continue to tighten credit.

Today’s July jobs report may provide more clues about the economy’s strength, and thus what the Fed may do in coming months. In any case, the central bank is expected to raise its key short-term rate from 3.25% to 3.5% on Tuesday.

Treasury bond yields were moderately higher Thursday. The benchmark 10-year T-note rose to 4.31% from 4.29% on Wednesday.

In currency trading the euro ended at $1.238 in New York, up from $1.233 on Wednesday and the highest since May 30. The euro has been lifted in recent days by growing optimism about the Continent’s economy.

Among the day’s market highlights:

* Retail shares sliding on July sales reports included J.C. Penney, down $2.50 to $53.92; Nordstrom, down $3 to $33.45; Abercrombie & Fitch, off $4.68 to $65.56; and Aeropostale, down $2.24 to $27.11.

* Harrah’s Entertainment slid $3.09 to $75.50. The biggest U.S. casino company said profit, excluding some items, was 90 cents in the second quarter, missing the average analyst estimate of 93 cents.

Other gaming stocks also dropped. Ameristar Casinos lost $3.20 to $26.43, MGM Mirage slid $1.15 to $42.93 and Las Vegas Sands gave up 52 cents to $37.60.

* On the plus side, stocks gaining on earnings reports included Sunrise Senior Living, up $5.68 to $60.39; and Irvine-based Quality Systems, a developer of healthcare information systems, which surged $4.59 to $66.18.

* Semiconductor stocks, which have led the tech sector in recent months, pulled back. Intel lost 63 cents to $27.01 and Texas Instruments retreated 60 cents to $31.90.

* Delphi rallied 54 cents, or 10%, to $5.78 for the best performance in the S&P; 500. The largest U.S. maker of auto parts is in bailout talks with General Motors and the United Auto Workers union, Automotive News reported, citing Delphi President Rodney O’Neal.

* Many energy stocks were higher with oil prices. Encana gained $1.05 to $43.09, Valero Energy jumped $2.78 to $89.24 and Noble Energy added $1.61 to $87.68.

* Callaway Golf climbed 60 cents to $15.50. The Times reported Thursday that the club maker has attracted two buyout offers. The company said “no substantive discussions currently are underway.”

* After regular trading ended, Baidu.com, China’s largest Web search engine, priced its initial public offering at $27 a share, well above the expected range of $23 to $25. The stock is expected to begin trading today on Nasdaq under the symbol BIDU.