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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 to 1600 ET)

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 among the day's weakest sectors.

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 along with an index of

semiconductors. The index is down more than 3% this week

as investors took profits after recent sharp gains.

According to preliminary data, the S&P 500 lost 14.72

points, or 0.27%, to end at 5,150.59 points, while the Nasdaq

Composite lost 49.24 points, or 0.30%, to 16,133.55. The

Dow Jones Industrial Average fell 136.61 points, or

0.32%, to 38,906.71.

The small cap Russell 2000 underperformed 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 after the trading

app operator said its assets under custody rose 16% in February.