Reuters Wall Street hit by economic, consumer jitters

NEW YORK (Reuters) - U.S. stocks slipped on Tuesday as mixed economic data and Best Buy's (BBY.N) disappointing sales spurred worries about an anemic recovery.

After a three-month run that lifted the S&P 500 as much as 40 percent from 12-year lows, analysts said the economy needs to start showing real improvement to support optimism about a budding recovery.

A rebound in May housing starts pointed to some stabilization in that sector, but another government report showed industrial production had a steeper-than-expected slide last month.

Industrial production fell 1.1 percent in May, while capacity utilization, a measure of slack in the U.S. economy, slumped to its lowest level on records dating back to 1967.

"It indicates that at a minimum, the market's taking a breather and may be starting a meaningful correction," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York, concerning the market's losses.

"The worry is we've gone too far too fast and that we've overstated the strength of a recovery in the economy and earnings."

Best Buy Co Inc (BBY.N), the largest U.S. consumer electronics retailer, posted weaker-than-expected sales in its first quarter and suggested earnings for the rest of the year would be worse than forecast. Its shares dropped 7.3 percent to $35.84. The S&P retail index .RLX tumbled 3.1 percent.

Indexes ended at session lows. The Dow Jones industrial average .DJI fell 107.46 points, or 1.25 percent, to 8,504.67. The Standard & Poor's 500 Index .SPX lost 11.75 points, or 1.27 percent, to 911.97. The Nasdaq Composite Index .IXIC was off 20.20 points, or 1.11 percent, to 1,796.18.

The S&P 500 is still up 34.8 percent from March's 12-year closing low. Declines have been shallow and short-lived, but analysts are increasingly looking for a larger pullback. more...