NEW YORK, Feb 14 — US stocks fell today, as consumer and retail stocks dropped after a sharp decline in retail sales in December suggested a slowdown in economic activity.

Retail sales tumbled 1.2 per cent in the last month of 2018, the commerce department said, the largest decline since September 2009 when the economy was emerging from a recession. Economists polled by Reuters had forecast retail sales increasing 0.2 per cent.

The S&P consumer staples declined 1.18 per cent, the most among the 10 major sectors trading lower, also weighed down by a steep drop in shares of Coca-Cola Co.

The soda maker fell 7 per cent after forecasting full-year profit well below expectations and reporting a quarterly decline in volumes in North America.

The S&P retailing index fell 1.33 per cent, as Amazon.com dropped 1.4 per cent, while home improvement chains Home Depot Inc and Lowe’s Companies slipped 1 per cent each.

"The numbers were a bit of a surprise on the downside and that is critical because this is for December and it suggests that people weren’t spending enough on holiday sales shopping,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The disappointing data pushed US Treasury yields lower, sending financials and the S&P banking sector tumbling 1.8 per cent.

The weak retail data also spurred more traders to bet that the Federal Reserve would cut key lending rates by the end of the year.

The data cast a shadow over optimism about the US-China trade talks, which entered a higher level in Beijing.

Top White House economic adviser Larry Kudlow gave an upbeat assessment on the talks, but said a decision has not yet been made on whether to extend a March 1 deadline.

Meanwhile, the Congress is looking to end a dispute over border security on Thursday with legislation that would ignore President Donald Trump’s request for funds to help build a US-Mexico border wall.

At 9.51am ET, the Dow Jones Industrial Average was down 195.24 points, or 0.76 per cent, at 25,348.03. The S&P 500 was down 17.92 points, or 0.65 per cent, at 2,735.11 and the Nasdaq Composite was down 32.37 points, or 0.44 per cent, at 7,388.00.

The fourth-quarter earnings season is slowly tapering off, and about 71 per cent of the S&P 500 companies that have reported earnings have topped expectations.

But outlook for the current quarter is less rosy. Analysts’ now estimate current-quarter profit to decline 0.3 per cent, which would be the first loss since the second quarter of 2016.

Cisco Systems Inc rose 4.4 per cent after the network gear maker’s earnings beat estimates, driven by strength in its newer applications and security businesses.

Declining issues outnumbered advancers for a 2.11-to-1 ratio on the NYSE and for a 1.72-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and one new low, while the Nasdaq recorded 20 new highs and 15 new lows. — Reuters