The major and very unexpected drubbing that the consumer discretionary sector has taken this week continued in earnest today as Nordstrom, Penney's and Macy's all came in with much worse earnings declines than had been forecast.  As reported last week, not only did the consumer sector fail in expectations to come in with double-digit increases this week but actually came in with losses, many of them double-digits, so the opposite of what was hoped for.  All that being said, even today's report of a 1.3% increase in April retail sales was not enough to prevent the 185 point slump the Dow had today with the release of these latest Q1 reports.  So Q1 is basically over and, even though it wasn't as bad as expected, at least the market had the hope for a considerably better Q2.  The really bad news today is that Q2 is no longer looking so hopeful.  For every S&P company that has forecast better Q2 earnings, there are more than 2 others that are forecasting a worse Q2.  The market reacted with 6.6 billion trades, a little lighter than the 7.2 billion average of the past month.

Markets | Fri May 13, 2016 4:37pm EDT

Wall Street drops at end of tough week for retailers

BY NOEL RANDEWICH

DJ:  17,535.32  -185.18       NAS: 4,717.68  -19.66        S&P: 2,046.61  -17.50

REUTERS/BRENDAN MCDERMID

U.S. stocks fell on Friday as a decline in oil prices added to pressure from consumer companies after gloomy quarterly reports from Nordstrom and J.C. Penney overshadowed upbeat April retail sales data.  The decline in the department stores' shares marked the end of a week that highlighted the expanding clout of Amazon.com (AMZN.O) and the plight of brick-and mortar retailers struggling to keep up with the online seller.

Crude prices slipped as a stronger dollar weighed and investors cashed in on gains from a three-day rally. [O/R]

That pushed the S&P energy index .SPNY down 1.25 percent.

U.S. retail sales jumped 1.3 percent last month, the largest gain since March 2015 and a bigger rise than economists expected, the U.S.  But consumer stocks, which have already been under pressure this week after a string of feeble earnings reports, fell again after Nordstrom and J.C. Penney reported lower-than-expected sales.

Nordstrom (JWN.N) slumped 13.42 percent and J.C. Penney Co Inc (JCP.N) lost 2.82 percent. Dillard's Inc (DDS.N), which gave a quarterly report that also disappointed Wall Street, fell 1.29 percent.

Amazon lost 1.12 percent but was 5 percent higher for the week following steady gains since last Friday.

On Wednesday, Macy's (M.N) poor quarterly report triggered a selloff in U.S. retailers. It lost 17 percent for the week after gaining 1 cent on Friday to $31.22.

First-quarter earnings reports are nearly all in and, on average, have not been quite as bad as expected across the S&P 500. But for June-quarter earnings, for every company that has given an upbeat preannouncement, 2.3 others have sounded warnings, according to Thomson Reuters I/B/E/S.

That has left the S&P 500 trading at about 16.5 times expected earnings, according to Thomson Reuters I/B/E/S.

"It's hard to make a case that you're going to have stellar equity market performance. In the context of low interest rates, equity valuations look about right," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania.

The Dow Jones industrial average .DJI dropped 1.05 percent to end at 17,535.32 and the S&P 500 .SPX lost 0.85 percent to 2,046.61.  The Nasdaq Composite .IXIC dropped 0.41 percent to 4,717.68.  All of the 10 major S&P sectors fell, led by a 1.29 percent decline in financials .SPSY. Consumer staples .SPLRCS lost 1.23 percent.

For the week, the Dow fell 1.2 percent, the S&P dipped 0.5 percent and the Nasdaq lost 0.4 percent. It was the third week in a row of losses for the Dow and S&P 500.

The S&P 500 is about flat for 2016.

In a bright spot, Nvidia (NVDA.O) surged 15.21 percent after the graphics chipmaker forecast better-than-expected revenue for the current quarter.

Declining issues outnumbered advancing ones on the NYSE by 2,000 to 980. On the Nasdaq, 1,627 issues fell and 1,145 advanced.

The S&P 500 index showed 15 new 52-week highs and eight new lows, while the Nasdaq recorded 27 new highs and 76 new lows.

About 6.6 billion shares changed hands on U.S. exchanges, light compared to the daily average of about 7.2 billion shares for the past 20 trading days, according to Thomson Reuters data.