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US retail sales rebound in Feb; weekly jobless claims fall

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Gasoline, food boost US producer prices in February

(Updates with final closing data, volume)

By Caroline Valetkevitch

NEW YORK, March 14 (Reuters) - U.S. stocks dropped on

Thursday, with chipmaker stocks extending losses for a second

day, and as a jump in producer prices left investors wondering

if the Federal Reserve might wait longer than expected to cut

interest rates.

Data showed U.S. producer prices increased more than

expected in February as the cost of goods like gasoline and food

surged.

Rate-sensitive utilities and real estate

were the day's weakest sectors, with real estate down 1.6% and

utilities off 0.8%.

The Fed is expected to leave rates unchanged at its

policy meeting next week. The market has trimmed the odds of a

cut of at least 25 basis points at its June meeting to 62.9%,

CME's FedWatch Tool showed, down from 81.7% a week ago.

"If we take inflation as a whole, we've had relatively hot

inflation readings the last two months now, yet the market has

kind of powered higher," said Tony Welch, chief investment

officer of SignatureFD.

"Fed policy may not be as loose as the market wanted it to

be this year, but the prospect of further tightening still

remains a low probability."

Nvidia ( NVDA ) shares fell 3.2%, while an index of

semiconductors was down 1.8%. The index is down 3.5% for

the week so far, with investors taking profits after recent

sharp gains.

The Dow Jones Industrial Average fell 137.66

points, or 0.35%, to 38,905.66. The S&P 500 lost 14.83

points, or 0.29%, at 5,150.48 and the Nasdaq Composite

dropped 49.24 points, or 0.3%, to 16,128.53.

The S&P 500 remains up about 8% for the year to date.

The small cap Russell 2000 fell 2% on the day,

underperforming the broader market.

"There's nervousness about the market being very

extended with a relatively narrow breath. You can see the

anxiety from the hotter PPI expressed in the Russell index of

small and midcap names," said Michael James, managing director

of equity trading at Wedbush Securities in Los Angeles.

Other data showed U.S. retail sales rebounded in February,

rising 0.6%, but less than the 0.8% advance expected.

Shares of Robinhood Markets ( HOOD ) rose 5.2% after the

trading app operator said its assets under custody rose 16% in

February.

Volume on U.S. exchanges was 13.1 billion shares, compared

with the 12.1 billion average for the full session over the last

20 trading days.

Declining issues outnumbered advancers on the NYSE by a

3.77-to-1 ratio; on Nasdaq, a 3.08-to-1 ratio favored decliners.

The S&P 500 posted 39 new 52-week highs and no new lows;

the Nasdaq Composite recorded 57 new highs and 186 new lows.