US STOCKS-Wall St ends lower after PPI data and as chipmakers fall

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.

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