Signs of Consumer Strain Hit Stocks By PETER A. MCKAY

Fresh signs of strain among U.S. consumers revived doubts about the broader economy's health and sent stocks sharply lower on Wednesday. The Dow Jones Industrial Average fell 184.22 points, or 2.2%, to 8284.89. The Nasdaq Composite Index sank 51.73 points, or 3%, to 1664.19, while the S&P 500 declined 24.43 points, or 2.7%, to 883.92. MarketBeat: Insider Selling Adds to Cautious Tone Deals: Playing the Name Game at GMAC Deals: Putting GE Capital Through Its Stress-Test Paces A series of troubling reports raised new concerns about consumer spending -- a key driver of economic growth. If Americans continue to curb their purchases of goods and services in the months ahead, that would undermine the scenario of a second-half economic rebound that investors have been hoping to see. The Commerce Department reported that retail sales fell 0.4% in April from the prior month, a steeper decline than the 0.1% slip economists expected. Sales in March were revised down, falling 1.3% instead of 1.2% as previously reported. Separately, a report by RealtyTrac showed that the number of U.S. households facing foreclosure jumped by 32% in April, and mortgage applications declined last week as fewer homeowners sought to refinance. Wednesday's data struck at a time when many market veterans believe stocks are vulnerable to a correction following a bustling springtime rally. "I've heard even some of the technicians say that the market is due to get more discerning here," with investors carefully sorting through individual names looking for those best positioned to weather the remainder of the recession, said portfolio manager Linda Duessel, of Federated Securities in Pittsburgh. "That's a pretty unusual thing for statisticians to say," since such traders tend to look for broad market swings based on chart patterns. Strategist Scott Marcouiller, of brokerage Wells Fargo Advisors, said that he was less concerned about the retail data than he was about the market's need for a more sustained correction following its hefty gains from early-March lows. "This is a market that's tired, using the retail news as an excuse to head lower," said Mr. Marcouiller. "But we're going to need more than a day or two of correction to really shake out the excesses." A report on energy inventories showed unexpected drawdowns in stockpiles of oil and gasoline. Such a development would normally register as a bullish one for energy traders, but in this case, analysts said the drawdown's details helped underscore the pain Americans are feeling at the pump, where prices have risen more than 10% over the past month, according to the driving club AAA. In a note to clients, MKM Partners economist Michael Darda noted that spending at gas stations was a major drag on the broader measure of retail sales, off 2.3% in April. However, he said that he remains confident in a late-year economic rebound, based upon the continued easing in the credit markets. Imports of oil hit a 10-year low as refiners decided to instead draw down their stockpiles rather than buy new oil to churn out gasoline to meet rising demand. "That's very unusual for this time of year," with summer driving season approaching on Memorial Day, said analyst Phil Flynn, of Alaron Trading in Chicago. "That's telling you that demand just isn't there, and the refiners are expecting that trend to stay in place." Light, sweet crude for June delivery settled at $58.02 a barrel, down 83 cents, or 1.4%, on the New York Mercantile Exchange. The S&P's energy sector declined 3.3%. Exxon Mobil fell 1.5%, while Chevron slid 1.6%. The basic-materials sector tumbled 4.3%. Financials were also sharply lower, with the sector sliding 5.1% as the Obama administration prepared to unveil a financial regulatory overhaul. The worrying economic reports caused investors to scoop up more government debt. Treasury prices were higher, particularly in longer maturities. The 10-year note jumped by 20/32 to yield 3.107% in recent trading. Yields have recently pushed above 3% despite the Federal Reserve's program to buy Treasurys to keep mortgage rates low. —Geoffrey Rogow contributed to this article Write to Peter A. McKay at peter.mckay@wsj.com