Fear is back on Wall Street: Dow drops 180

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Fear returned to Wall Street Thursday in a big way. Stocks were down across the board as the bears came out from hibernation.

The Dow Jones industrial average was down more than 180 points in recent trading. The SP 500 and the Nasdaq both fell more than 1%.

Investors rushed into bonds, driving the yield on the 10-year Treasury to 2.48%, the lowest level since Oct. 2013. Bond yields fall when prices rise.

The selling adds to Wednesday’s losses, and marks a significant shift from the recent trend. The Dow has hit a string of record closing levels this week. To put it in perspective, the SP 500 crossed the 1,900 mark for the first time on Tuesday. It’s now around 1,865.

What’s driving the pullback?

There was no specific trigger for the retreat, said Bernard Kavanagh, a portfolio manager at Stifel Nicolaus. He said investors have been on the lookout for a pullback this year and many are primed to sell stocks at the slightest hint of bad news.

“It’s more sentiment driven than anything else,” he said. “People are feeling skittish after we hit all-time highs just a few days ago.”

Some traders pointed to comments by David Tepper, a widely followed hedge fund manager, who said Wednesday that he’s “nervous” about the market.

European markets were also under pressure following mixed economic data from the eurozone. Spanish and Italian stock markets were down nearly 3%.

The jitters were evident on StockTwits, where traders seemed particularly worried about small-cap stocks. The iShares IWM (IWM) exchange traded fund, which tracks a basket of 2000 small companies, is down more than 10% from its most recent high, which meets the standard definition of a correction.

$SPY $IWM crash risk is high, need to stay alert,” said slowslimslider.

Traders were also sounding alarm bells about the broader market as well.

$SPY fear just broke my chart,” said Bemer14

But at least one trader was still holding out hope for a turnaround later in the day

$SPY no reason to be bullish today! until the final hour,” said MrWallstreet.

Wal-Mart, other retailers disappoint

Investors were rattled by poor earnings and sales data from Wal-Mart. (WMT, Fortune 500) The big discount retailer said its results were hurt by bad weather and a delay in tax refunds caused by last fall’s government shutdown.


Kohl’s (KSS, Fortune 500) also had bad news. The department store chain said sales fell 3.4% in the first quarter, missing the company’s own expectations.

After the market closes, fellow retailers J.C. Penney (JCP, Fortune 500) and Nordstrom (JWN, Fortune 500) will release quarterly reports.

General Motors (GM, Fortune 500) announced five new recalls covering 2.7 million vehicles, including a wiring flaw tied to 13 accidents and two injuries. It was the latest in a string of high-profile recalls this year that have hit the automaker’s bottom line.

The technology sector was a bright spot in early trading Thursday. Cisco Systems (CSCO, Fortune 500) shares rallied more than 7% after the maker of information technology equipment and software reported earnings that beat expectations last night.

Related: Fear Greed Index in ‘extreme fear’ mode

The fast-food industry is also in the spotlight Thursday as workers plan demonstrations in 150 cities around the world to protest low wages. Shares of McDonald’s (MCD, Fortune 500), Domino’s (DPUKY) and Burger King (BKW) were only down modestly so far.

Economic data mixed

On the economic front, the government said new claims for unemployment benefits fell in the week ending May 10. As expected, consumer prices increased 0.3% in April. Excluding food and energy prices, the consumer price index rose 0.2% last month.

The Federal Reserve said industrial production fell 0.6% in April, surprising economists who were expecting no change. A report on manufacturing activity in the New York area came in above expectations, while activity in the Philadelphia region slowed.

Federal Reserve chair Janet Yellen will be speaking about small business and the economy during a talk in Washington this evening.

Related: CNNMoney’s Tech30

Asian markets had a mixed day. Investors in Japan pushed the Nikkei lower, shrugging off an impressive report on strong economic growth in the first quarter.

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