US stocks decline modestly after retail sales report

NEW YORK - Wall Street pulled back modestly Tuesday after a report on retail sales and comments from Federal Reserve Chairman Ben Bernanke gave investors little incentive to extend the previous session's big advance.

Investors remained concerned that higher energy and food prices will curb consumer spending, which makes up more than two-thirds of the U.S. economy. The latest report from the Commerce Department showed that retail sales fell in April, adding further worries about a recession.

The report, which was right in line with economists' expectations, did show better-than-expected sales if automobiles are excluded. However, it also indicates Americans are reluctant to make big-ticket purchases — especially as soaring gasoline prices cut into demand.

Meanwhile, Bernanke said during a speech at the Atlanta Fed's Financial Markets Conference that turmoil in financial markets has eased somewhat, but the situation is still "far from normal." He noted some improvements in the markets for certain mortgage-backed securities, such as those backed by Fannie Mae and Freddie Mac, as well as some fixed-rate mortgages and corporate debt.

The Dow Jones industrial average fell 22.72, or 0.18 percent, to 12,853.59 after rising 130 points on Monday.

Broader indexes were also lower. The Standard & Poor's 500 index fell 1.30, or 0.09 percent, to 1,402.28. And, the Nasdaq composite index declined 2.37, or 0.10 percent, to 2,486.12.

(Agencies)