Energy stocks weighed on the market as oil slid $2.28 to settle at $56.34 a barrel on the New York Mercantile Exchange. Schlumberger fell $1.88, or 3.5%, to $52.05, while Devon Energy fell $3.51, or 5.7%, to $58.50.
FirstEnergy fell $3.87, or 9.6%, to $36.47 after the regional electric utility's energy supply and pricing auction in Ohio came in below analyst expectations. The stock traded as low as $35.26, a level not seen since December 2003.
The market hit its highest levels of the rally last Friday as investors bought when news, including April employment figures, wasn't as grim as feared. This week, however, the government surprised Wall Street with its report that retail sales fell in April.
Dreyfus Chief Investment Officer Phil Maisano contends the break makes sense. He said the market is fairly valued where it stands and is now factoring in a severe recession instead of a depression.
"We're clearly not going to have any form of a V-shaped recovery," Maisano said, referring to the pace of the rebound from the economy's tumble in the fall. "It will be a longer slog."
Even with the government's bank rescue and economic stimulus spending, Maisano expects the economy will still have a tough recovery.
"It was virtually a tourniquet. It stopped the bleeding but it doesn't have much effect on the healing at the moment," he said.
Next week, investors will get data on housing sales on Monday, on housing construction a day later and on regional manufacturing on Thursday. The reports could help drive the market but many analysts say more clear signs of an economic recovery, not just stabilizing, will be what is needed to propel Wall Street.
In other trading Friday, the Russell 2000 index of smaller companies fell 4.87, or 1%, to 475.84.
Bond prices fell after the inflation data. The yield on the 10-year Treasury note rose to 3.14% from 3.09% late Thursday.
The dollar rose against most other major currencies, while gold prices rose.
Overseas, Britain's FTSE 100 fell 0.3%, Germany's DAX index slipped less than 0.1%, and France's CAC-40 rose 0.4%. Japan's Nikkei stock average rose 1.9%.