Wall Street recovery fizzles as investors play safe

Wall Street’s hopes of a recovery fizzled out tonight after mixed retail reports persuaded investors to play it safe and cash in their gains from the huge rally a day earlier.

Stocks fell sharply, although the major indexes preserved more than half of Wednesday’s significant gains.

A retreat after a big advance is not unusual, but analysts said the declines were a reminder that buyers still do not have enough faith in the business recovery to think that bidding stock prices higher will pay off.

‘‘By and large, this bull is looking like a one-trick pony,’’ said Bryan Piskoroswki, market commentator at Prudential Securities. ‘‘We didn’t give it all back, but sustainability and follow-through are still big problems for this market.’’

The Dow Jones industrial average closed down 104.41, or 1%, at 10,037.42, pulling back from its 305-point gain Wednesday.

Broader stock indicators also fell back. The Nasdaq composite index lost 45.80, or 2.7%, to 1,650.49. The Standard & Poor’s 500 index was down 15.84, or 1.5%, at 1,073.01. On Wednesday, the Nasdaq soared 122 points, while the S-and-P gained 39.

A run of mostly unimpressive retail sales reports started the session on a negative note. Consumer spending accounts for two-thirds of the US economy and retail sales are considered one indicator of its strength.

Wal-Mart fell dlrs 1.40 to dlrs 54.99 and Target lost dlrs 2.29 to dlrs 42.03 after reporting weaker-than-expected April sales at stores open at least a year.

But the Gap rose dlrs 1.08 to dlrs 15.79 on a smaller-than-expected sales decrease.

‘‘This type of news preys upon people’s concern that the consumer side of the economy could be at risk,’’ said Tom Galvin, chief investment officer at Credit Suisse First Boston.

Reports of anthrax in the mail at the Federal Reserve also unnerved the market, although stocks had been falling before the news. Authorities said more tests would have to be done to confirm the finding.

Tech stocks fell as investors collected gains from Wednesday’s trading. Cisco Systems, whose stronger-than-expected profits triggered the rally, was down 52 cents at dlrs 15.75 cutting into its 24% gain Wednesday.

The Nasdaq has fallen 15.4% from where it started 2002; the S&P is off 6.5% and the Dow is up 0.2%.

Declining issues led advancers 3 to 2 on the New York Stock Exchange. Volume came to 1.14 billion shares, well below the 1.5 billion shares reported Wednesday.

The Russell 2000 index fell 8.36, or 1.6%, to 501.39.