Stocks tumble due to disappointing retail sales

Wall Street extended its 2009 retreat Wednesday, falling sharply after the government issued a dismal reading on retail sales and investors grew increasingly anxious about the banking industry. Major stock indexes lost more than 3 percent, including the Dow Jones industrial average, which fell about 250 points, its sixth straight slide.

Although investors already knew that retailers suffered a terrible holiday season, a government report on December sales was much worse than anticipated. The Commerce Department said retail sales dropped 2.7 percent last month, more than double the 1.2 percent decline analysts forecasted.

The pullback in sales marked a record sixth straight month of declines and was the latest sign of the troubles still facing consumers. A steep drop in home prices, rising unemployment and difficulty accessing credit have given many consumers no choice but to pare their spending. That’s troubling for investors because consumer spending accounts for more than two-thirds of U.S. economic activity. Many predict the recession, already the longest in a quarter-century, will persist at least until late this year.