Stocks fell on Thursday as disappointing holiday sales from Macy's and a revenue guidance cut from American Airlines pressured retail and airline shares.
The Dow Jones Industrial Average fell 169 points, while the S&P 500 pulled back 0.8 percent. The Nasdaq Composite declined 1 percent. Thursday's decline was the first for the indexes in five sessions.
Macy's shares tanked more than 18 percent — on pace for their worst day every — after reporting its same-store sales grew by just 1.1 percent in November and December . The company also cut its earnings and revenue forecast for fiscal 2018.
The sharp decline in Macy's dragged down the entire retail space. The SPDR S&P Retail ETF (XRT) dropped more than 3 percent. Shares of Kohl's fell 8.9 percent while Nordstrom declined 7.8 percent.
Meanwhile, American Airlines fell more than 9 percent after slashing its revenue growth forecast for the fourth quarter. Shares of Delta Air Lines, JetBlue Airways and Southwest Airlines all fell at least 3 percent.
"The question is whether all of this has already been baked in," said Quincy Krosby, chief market strategist at Prudential Financial. "If the market can look past this, it will suggest that much of this has been backed in."
The announcements from Macy's and American Airlines came as the earnings season for calendar fourth-quarter 2018 is set to ramp up. J.P. Morgan Chase, Bank of America, BlackRock and Morgan Stanley are among the companies set to report next week.
Fourth-quarter earnings are expected to have risen nearly 15 percent on a year-over-year basis, but growth is expected to be much lower moving forward. According to Thomson Reuters, first-quarter earnings are forecast to rise by 3.9 percent .
Thursday's moves down took place after delegations from Washington and Beijing ended three days of trade negotiations in China on Wednesday. China's commerce ministry said Thursday the negotiations were extensive and had helped set up a foundation for further talks. This week's face-to-face meetings were the first to take place since U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce last month.
If both sides are unable to secure a comprehensive trade agreement by March 2, Trump has said he plans to raise tariffs to 25 percent from 10 percent on $200 billion worth of Chinese imports.
Stocks closed higher on Wednesday, with the S&P 500 notching its longest winning streak since September. The move higher added to the sharp bounce since the broad index briefly dipped into bear-market territory in late December. Since then, the S&P 500 is up nearly 10 percent through Wednesday's close.
"The power of the recovery rally in US and global equities has been impressive," Michael Shaoul, chairman and CEO of Marketfield Asset Management, wrote in a note to clients. "As encouraging as all of this has been to witness it does not change the fact that a sell-off of this magnitude does not happen in a vacuum."
"The decline marks a key downward-shift in the long technology driven bull market," Shaoul added. "There is simply no way to tell at present whether we have witnessed the completion of a brief but tumultuous sell-off."
—CNBC's Sam Meredith contributed to this report.