U.S. stocks slipped, though a stronger-than-expected report on retail sales helped limit the losses, giving the Dow Jones Industrial Average a shot at extending its winning streak.
The Dow industrials gave up 14 points, or 0.1%, to 14436, in Wednesday midday trading. The Standard & Poor's 500-stock index edged down one point, or 0.1%, to 1551, and the Nasdaq Composite lost five points, or 0.2%, to 3237.
Materials and telecommunications stocks were the weakest sectors on the S&P 500. Alcoa was the worst performer among Dow components, while Cliffs Natural Resources was the biggest decliner on the S&P 500, tumbling to its lowest level in nearly four years.
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Offsetting the losses, consumer-discretionary stocks advanced, following a positive report on U.S. retail sales, which grew 1.1% in February. The data topped expectations for growth of 0.6%. Stripping out auto sales, retail sales grew 1%; a 0.6% increase was expected.
The report helped bat down worries in recent weeks that U.S. consumers would spend less as taxes rise and gasoline prices remain high. Wal-Mart Stores edged up, while Walgreen climbed to its highest level in more than a year. Best Buy and Kohl's gained, while Abercrombie & Fitch and Nike were also strong.
However, JCPenney fell one day after rising 4% on speculation that Chief Executive Ron Johnson may depart, rumors that have since been dispelled by the company. The department store operator is giving a presentation in the afternoon.
Separately, Express slid after the apparel retailer provided a current-quarter outlook that was below current analyst projections, citing lower traffic levels and consumer spending in February.
"No matter how you slice it or dice it, the consumer hasn't fallen out of bed," said Bernie Williams, vice president of discretionary money management at USAA Investments. Mr. Williams has been cutting back on retailers as a result of recent headwinds on the consumer, but says there are plenty of opportunities among retail stocks.
Partly in response to the strong retail sales data, Deutsche Bank economists lifted their gross domestic product estimates for 2013. Other economists and investors were encouraged, too.
"The consumer is resilient and unfazed. It's really striking how buoyant the consumer has remained in the face of all these headwinds," said Tom Porcelli, chief U.S. economist at RBC Capital Markets. "We're definitely surprised."
While the retail sales data helped pare the pullback in stocks Wednesday, Mr. Porcelli said the clearer reaction came in the Treasury market, where investors spurned the perceived safety of the government securities, pushing the yield on the benchmark 10-year note up to 2.04%. "The general trend in Treasury yields is much more indicative of an improved backdrop," he said.
The Dow has risen for eight consecutive sessions. On Tuesday, the blue-chip index eked out a gain of three points, or less than 0.1%, despite declines in the broader market. The string of advances is the longest since early 2011. If the Dow closes higher Wednesday, it would mark the longest winning streak for the index since late 1996.
European markets were broadly lower. The Stoxx Europe 600 slipped 0.1%, after news that industrial production in the euro zone fell more than expected in January. In addition, Italy sold �6.993 billion ($9.11 billion) of bonds, less than the high end of its targeted range at �7.25 billion, in the first auction after the government's credit rating was downgraded by Fitch Ratings last week. Italy's FTSE MIB stock index shed 1.7%.
Asian markets also pulled back. Chinese stocks were hit by concerns over the imposing of curbs on property prices. China's Shanghai Composite fell for a fifth-straight session, shedding 1% to a two-month low. Japan's Nikkei Stock Average lost 0.6%.
Crude-oil futures inched up to about $92.70 a barrel, while gold futures slipped to just below $1,590 an ounce. The dollar surged against the euro and rose against the yen.
In economic headlines beyond the retail-sales data, February import prices rose 1.1%, above expectations for a 0.6% rise. Business inventories, meantime, rose 1% in January, higher than expectations for a 0.5% increase.
In corporate news, Dole Food slumped after the fresh-fruit supplier reported a wider-than-expected quarterly loss. Revenue fell more than forecast, and the company said conditions were difficult in the banana market.
Coach edged up after Citigroup raised its investment rating on the luxury handbag maker to "buy" from "neutral," citing an appealing valuation and the belief that the stock has transitioned from a growth stock to value. Coach has been one of the worst performers this year on the S&P 500, off 12%.
In new public offerings, Silver Spring Networks, which operates a hardware and software network designed to help utility companies create what is known as a "smart grid," surged on its listing on the New York Stock Exchange.
Write to Jonathan Cheng at jonathan.cheng@wsj.com
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