Retail sales, Goldman hit Wall Street; Intel drops late

By Ellis Mnyandu

NEW YORK (Reuters) - Stocks fell on Tuesday as a surprising drop in retail sales dented hopes the recession was abating and financial shares slid on fears that Goldman Sachs' (GS.N) share offering could prompt others to follow suit.

Retail sales in March snapped two months of increases and sparked selling across the board, with the stocks of retailers, big manufacturers, technology and energy companies among the casualties. The S&P retail index .RLX fell 2.5 percent.

But the financial sector, which had recently led the stock market's 5-week rebound from 12-year lows, took the biggest beating by far, with the KBW Bank index .BKX falling 8.1 percent and the S&P financial index .GSPF dropping 7.7 percent.

"There is fear that other banks wanting to pay back government funds may want to raise cash by issuing shares," said Ryan Detrick, senior technical strategist at Ohio-based Schaeffer's Investment Research.

The gloomy news on retail shows that "maybe the economy hasn't turned around as the last 5-week bounce suggested."

The Dow Jones industrial average .DJI dropped 137.63 points, or 1.71 percent, to 7,920.18. The Standard & Poor's 500 Index .SPX fell 17.23 points, or 2.01 percent, to 841.50. The Nasdaq Composite Index .IXIC declined 27.59 points, or 1.67 percent, to 1,625.72.

INTEL DROPS LATE, BUT eBAY JUMPS

After the bell, shares of Intel Corp (INTC.O) shed 4.6 percent to $15.28 after the chip maker and a Dow component gave no formal second-quarter revenue forecast even as it posted stronger-than-expected first-quarter results.