U.S. stocks declined on Thursday after retail sales figures disappointed and as investors monitored tension in Iraq and the resulting rise in energy costs.
Brent futures rose above $110 a barrel and crude jumped above $106 a barrel, with futures lately up $1.57, or 1.5 percent, at $105.97 a barrel, amid a Sunni militant uprising in Iraq that had rebels controlling two cities and the Wall Street Journal reporting that Iran was sending elite troops to Iraq to help it fight the rebellion.
Domestically, retail sales rose less than expected in May, according to Commerce Department data, which had sales up 0.3 percent last month and the prior month revised higher to 0.5 percent.
In gauging “retail sales or the offshoot of what is going on in Iraq, which is sending energy prices higher, I’d say the latter” is having more of an impact on equities, said Art Hogan, chief market strategist at Wunderlich Securities.
There is “concern there could be a disruption in supply because of what is going on in Iraq,” said Hogan, which is a more negative story for Wall Street than it would be if crude rose on increased demand due to an improving economy.
The S&P 500 declined 6.89 points, or 0.4 percent, to 1,937, with utilities hardest hit and energy the sole industry group climbing among its 10 major sectors, as energy usurped utilities as the top performing sector, year to date.
Shares of Lululemon Athletica dropped to a more-than three-year low after the Canadian yogawear retailer reduced its revenue and earnings forecast for the fiscal year and said its CFO would retire early next year.
Twitter shares gained after the micro-blogging service said Ali Rowghani had resigned as chief operating officer, effective Thursday.
The Nasdaq dropped 15.10 points, or 0.4 percent, to 4,316.83.
Decliners outran advancers by a 9-to-5 ratio on the New York Stock Exchange, where 171 million shares traded by 11:10 a.m. Eastern. Composite volume hit 892 million.
The CBOE Volatility Index, a measure of investor uncertainty, rose 1 percent to 11.72 and gold jumped 0.9 percent, with futures for August delivery climbing $11.30 to $1,272.50 on the New York Mercantile Exchange.
The dollar fell against the currencies of major U.S. trading partners and the 10-year Treasury yield, used to figure mortgage rates and other consumer loans, fell 2 basis points to 2.621 percent.
Other economic reports Thursday had the number of Americans filing new claims for jobless benefits unexpectedly rising last week, although not enough to alter the view of a labor market that is picking up steam.
And, the Labor Department reported import prices rose 0.1 percent last month after declining 0.5 percent in April.
Also, the Commerce Department reported inventories rose 0.6 percent in April and picked up excluding cars, boosting expectations of increased economic growth in the second quarter.
U.S. stocks declined on Wednesday, with benchmark indexes retreating from all-time highs, after the World Bank lowered its outlook for global growth.
—By CNBC’s Kate Gibson