NEW YORK -- U.S. stocks fell on Friday, giving the Standard & Poor's 500 Index its first weekly drop in more than a month, as investors speculated the Federal Reserve may raise interest rates sooner than estimated after retail sales climbed at the fastest pace in four months.
Energy shares in the S&P 500 fell 1.5 percent, extending losses for the week to 3.7 percent. Caterpillar lost 0.5 percent for its sixth straight decline. Yahoo rose 3.9 percent to an eight-year high
as Alibaba prepared for an initial public offering. Conversant surged 30 percent after Alliance Data Systems agreed to buy it.
The S&P 500 fell 0.6 percent to 1,985.54 at 4 p.m. Friday in New York, capping a 1.1 percent slide this week. The Dow Jones Industrial Average slid 61.49 points, or 0.4 percent, to 16,987.51. The Russell 2000 Index dropped 1 percent. About 6 billion shares changed hands on U.S. exchanges, 7.7 percent above the three-month average.
"Today's retail sales and consumer confidence data fall into the argument of those who believe the Fed lift-off date may come sooner," Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott, which oversees $67 billion in assets, said by phone. "The worry is if the Fed has to lift rates sooner rather than later, there's the question of when, but also what the trajectory of interest-rate increases will be and if it will undermine this sanguine picture of equities as the only game in town."
The 0.6 percent gain in retail sales matched the median forecast of 82 economists surveyed by Bloomberg and followed a 0.3 percent increase the prior month that was stronger than previously reported, Commerce Department figures showed on Friday in Washington. Eleven of 13 major categories showed advances, led by auto dealers and building material stores.
The Thomson Reuters/University of Michigan preliminary consumer sentiment index rose to 84.6 in September from 82.5 the month before. The median estimate in a Bloomberg survey of economists projected an increase to 83.3.
The Fed is assessing the strength of the economy as it winds down a bond-buying program and considers raising rates. The central bank, which meets Sept. 16-17, has said that its benchmark rate will stay low for a "considerable time" after it completes the monthly bond purchases.
The S&P 500 decline this week on concern the Fed may raise interest rates sooner than forecast. The index closed at a record on Sept. 5, after rallying for five straight weeks, the longest winning streak this year. The gauge hasn't posted a four-day string of losses in all of 2014, and the last time it fell more than 10 percent was three years ago.
The benchmark gauge is trading at 16.6 times the projected earnings of its members, near the 16.8 multiple reached on Sept. 5 that was the highest valuation since the end of 2009, according to data compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, increased 3.9 percent to 13.31. The volatility measure jumped 10 percent this week, its biggest gain since Aug. 1.
All of the 10 main industries in the S&P 500 declined Friday. Energy shares tumbled 1.5 percent, extending a decline this week to 3.7 percent as crude prices have fallen on concern that global oil demand is slowing. Utility shares slid 1.8 percent as a group.
Caterpillar slumped 0.5 percent to $105.02. Bank of America earlier this week lowered its rating on the shares to neutral from buy. The shares have lost 3.5 percent since Sept. 4.
Yahoo rose 3.9 percent to $42.88, the highest level since January 2006. Alibaba received enough demand for its IPO that it plans to stop taking orders, according to people with knowledge of the matter. Yahoo is set to get an $8 billion windfall from the IPO. Alibaba plans to set a final price for the shares on Sept. 18, with trading to begin the next day.
Conversant, which helps companies target users with Internet advertisements based on their previous online searches, soared 30 percent to $34.80, the highest since 2007. Alliance Data agreed to buy the company for $2.3 billion, or $35 a share, according to a statement.
Ulta Salon Cosmetics & Fragrance jumped 18 percent to $114.89 after forecasting third-quarter revenue of as much as $736 million, exceeding the $718 million average analyst estimate in a Bloomberg survey.