June 13 (Bloomberg) -- The five-week retreat in U.S. stocks showed no signs of slowing as share prices gave up earlier gains and fell for a third day after the government said producer prices rose last month and retail sales growth slowed.

The figures gave the Federal Reserve more evidence to keep lifting interest rates and investors more fodder for concern that the central bank will choke off the economy. The Standard & Poor's 500 Index extended its loss for the year to 1.4 percent and the Dow Jones Industrial Average nearly gave up its gain.

Exxon Mobil Corp. and Alcoa Inc. dropped with oil and metal prices on speculation global demand for raw materials may slow. Gold had its biggest plunge in 15 years. Goldman Sachs Group Inc. led the largest two-day decline in brokerage shares since 2002 as tumbling markets and higher rates may hurt profits.

``I don't think there's really been any change in the underlying fears that have spooked the market,'' said Todd Clark, director of trading at Nollenberger Capital Partners, a brokerage firm in San Francisco. ``That's the growing fear of inflation and a slowdown in the economy.''

The S&P 500 lost 5.59, or 0.5 percent, to 1230.81 at 3:44 p.m. in New York. The index is down 7.2 percent from a five-year high set during the first week in May. The Nasdaq Composite Index dropped 9.20, or 0.4 percent, to 2082.12. The Dow average dropped 28.65, or 0.3 percent, to 10,763.93 and is up just 0.3 percent for 2006.

Indexes bounced between gains and losses earlier as earnings from Best Buy Co. topped analysts' estimates, giving some investors reason to buy. Others said they were waiting for a report on consumer prices tomorrow to confirm that inflation is rising. The S&P 500 was up as much as 0.6 percent in the first half of trading and later fell as much as 1.1 percent.

Worldwide Tumble

Speculation that central banks will need to keep raising interest rates to fight rising prices sent international markets tumbling. The Morgan Stanley Capital International's Europe, Australasia, Far East Index, or EAFE, declined 3 percent. The MSCI Emerging Markets Index, a measure of stocks in 25 developing countries, lost 4.4 percent.

Producer prices increased 0.2 percent in May, the Labor Department said. Excluding fuel and food, the gauge climbed 0.3 percent last month after a gain of 0.1 percent in April. That was higher than the 0.2 percent core number expected by economists.

Sales at retailers rose 0.1 percent in May as higher gasoline prices hurt spending, the Commerce Department said. Excluding service stations, sales fell 0.1 percent.

A report on consumer prices is due tomorrow and may show a drop in growth, excluding food and energy, to 0.2 percent in May from 0.3 percent the month before.

`Overboard'

``There is clearly a risk that the Fed may go overboard and we may see some more tremendous slowdown'' such as a recession, said Amit Khandwala, who manages $2.3 billion as chief investment officer for equities at Wright Investors Service in Milford, Connecticut.

More than six stocks fell for every one that rose on the New York Stock Exchange. About 1.81 billion shares changed hands on the Big Board, 18 percent more than the same time a week ago.

The Chicago Board Options Exchange's S&P 500 Volatility Index, a measure of future stock market volatility based on S&P 500 options, surged 11 percent to a three-year high.

Exxon Mobil, the world's largest publicly traded oil company, lost $1.02 cents to $57.22.

Crude oil for July delivery fell 2.6 percent to $68.50 a barrel in New York on expectations gasoline supplies will meet summer driving demand.

Metals

Alcoa, the world's biggest aluminum producer, retreated 96 cents to $28.77. The Reuters/Jeffries CRB Futures Price Index, which tracks commodities including natural gas, nickel and even orange juice, declined 0.9 percent.

Freeport-McMoRan Copper & Gold Inc., which operates the world's largest gold mine in Indonesia, tumbled $3.14 to $43.57. Gold for August delivery slid 7.3 percent to $566.80 an ounce on the Comex division of the New York Mercantile Exchange, the steepest drop since January 1991.

Best Buy climbed $2.59 to $51.62. The largest U.S. electronics retailer posted its biggest profit increase in a year as the company sold more flat-panel televisions and digital-music players. Net income rose 38 percent to $234 million, or 47 cents per share, from $170 million, or 34 cents, a year ago.

Circuit City Stores Inc., Best Buy's rival, added 60 cents to $28.03.

Qualcomm gained after the second-largest maker of chips for mobile phones raised its third-quarter forecast to earnings of 41 cents to 42 cents a share on revenue of $1.91 billion to $1.96 billion, citing unexpectedly high consumer demand for new phones. The company previously forecast profit of as much as 40 cents on sales of as much as $1.87 billion. Qualcomm jumped 75 cents to $41.94.

`Robust' Earnings

``To an extent we are losing a little bit of sight that the earnings story continues to be robust,'' said Jack Caffrey, an equity strategist at JPMorgan Private Bank in New York. ``Earnings estimates keep being revised higher.''

The decline in stocks a day ago came after Fed Bank of Cleveland President Sandra Pianalto said that inflation exceeds her ``comfort level.'' Investors said Pianalto's remarks, the seventh by a Fed official in as many days, intensified speculation that the central bank will raise interest rates for the 17th straight time at the end of this month.

Goldman Sachs Drops

Goldman Sachs lost $6.60 to $138.40 even as profit exceeded analysts' estimate. Net income climbed to $4.78 a share in the quarter ended May 26 from $865 million from $1.71, a year earlier. Profit exceeded the $4.28-a-share mean estimate in a Thomson Financial survey of analysts. Earnings were driven by higher revenue from trading and advising mergers.

U.S. investment bank and brokerage stocks in the Amex Securities Broker/Dealer Index headed for their biggest two-day drop since July 2002 on concern record profits may slow as tumbling equity markets and rising interest rates threaten trading and underwriting revenue.

Investors want to ``get out of financial institutions or those that are tied to the marketplace right now,'' said John O'Donoghue, co-head of trading at S.G. Cowen & Co. in New York. ``That's the fear, that the Fed's going to overstep the line.''

Jabil, Apple

Jabil Circuit Inc. plunged $7.72, or 24 percent, to $24.70 for the steepest slide in the S&P 500. The maker of cell phones for Nokia and network parts for Cisco said profit in the third quarter ended May 31 missed its forecast because of problems with some production and repair facilities. Net income was 26 cents to 30 cents a share, lower than its projection of 39 cents.

Shares of Merck rose 49 cents to $33.86 after a study found that an experimental pill worked as well as an older treatment for diabetes and controlled levels of blood sugar more safely. Merck is seeking U.S. approval for the pill, called Januvia.

Apple Computer Inc. rose $1.59 to $58.59. The maker of the iPod was raised to ``buy'' from ``hold'' by Needham & Co. analyst Charlie Wolf, who gave the shares a 12-month price target of $90.

EBay Inc. added 83 cents to $30.94. The biggest online auction site affirmed a 2006 sales forecast of $5.7 billion to $5.9 billion at its annual shareholder meeting.

To contact the reporter on this story: Dune Lawrence in New York at dlawrence6@bloomberg.net.

Last Updated: June 13, 2006 15:51 EDT