NEW YORK - Wall Street stocks retreated on Friday following a positive session on European bourses, as disappointing US retail sales data offset a lift from better-than-expected bank earnings.
Retail sales fell by a surprisingly big one percent in March, extending a downward trend that signals cooling in the world's biggest economy.
But that downcast reading was countered by surprisingly good earnings from JPMorgan Chase and other large banks that cheered investors nervous about the sector.
After opening modestly higher, major US indices spent the rest of the day in the red.
Analysts pointed to hawkish comments from Federal Reserve Governor Christopher Waller that prompted a rethink of US inflation reports this week. Easing inflation earlier raised hopes for a pause in interest rate hikes soon.
"Wall Street got scared after strong results from JPMorgan, surging inflation expectations, and some hawkish Fed speak," said Oanda's Edward Moya, pointing to fears that the Fed could raise rates not just in May but also in June.
The S&P 500 ended 0.2 percent lower, cutting into its gains for the week.
Chris Beauchamp, chief market analyst at online trading platform IG, said the poor US retail sales figures had investors "fretting again about a US recession."
"While it is a Friday, and risk appetite is hard to sustain, today's losses after Thursday's gains show how delicate the rally in US equities is," he said.
JPMorgan Chase surged more than seven percent following a blowout earnings report, while Citi jumped 4.8 percent.
At the other extreme, Boeing plunged 5.6 percent after disclosing a problem with a supplier part on the 737 MAX that is expected to slow deliveries of new jets.
Earlier, the Paris CAC 40 stocks index of leading French companies hit a new record-high, closing 0.5-percent up at 7,519.61 points, buoyed in part by strong earnings Thursday from luxury group LVMH.
London and Frankfurt also rose, while oil prices edged higher.
After hitting a 12-month low against the euro on Thursday, the dollar rebounded somewhat Friday.