Updated from 4:03 p.m.

Weak April retail sales results cast a pall over the market Thursday and the major averages finished with losses.

The Dow Jones Industrial Average lost 69 points, or 0.8%, to 8491, while the Nasdaq shed 17 points, or 1.1%, to 1489. The S&P 500 fell 9 points, or 1%, to 920.

"The market got a little bit of a reality check and paused after a tremendous move. But although retail sales were mixed, signaling cautionary strength for a recovery, the underlying picture is strong," said Jim Awad, president and market analyst at Awad Asset Management.

On the NYSE, 1.3 billion shares were traded, with decliners outpacing advancers by a ratio of 17 to 14. Almost 1.6 billion shares traded hands at the Nasdaq, with losers leading winners 19 to 11.

A few research notes pressured the Dow. Standard & Poor's cut its credit ratings of McDonald's ( MCD) because of weak 2002 earnings and difficulties that the chain faces in implementing business changes. McDonald's shares ended 1.3% lower at $17.16.

AT&T ( T) lost 1.3% to $16.26 after its shares were downgraded to underperform from sector perform at CIBC World Markets due to weakening long-distance results.

Retailers posted their April results, and sales were largely weak. Wal-Mart ( WMT) said same-store sales rose 4.6% in April, below analysts' projections, and predicted that sales would rise only 1% to 3% in May. But the company also said it expects to beat earnings estimates in the first quarter. Wal-Mart shares fell 0.2% to $54.98.

The picture was bleak for most of the other retailers, with J.C. Penney ( JCP) saying department store sales dropped 6.9% in April, double what the company had predicted. Among others that suffered sales declines were Kohl's ( KSS), Sears ( S), Federated Department Stores ( FD), Abercrombie & Fitch ( ANF) and Pier 1 ( PIR).

Nordstrom ( JWN) said its drop in sales will result in lower earnings this quarter. Shares were down 8.3% at $16.15.

Gap ( GPS) shares gained 3.8% to $17.23 after it posted a jump of 20% in same-store sales. Target ( TGT) and BJ's Wholesale ( BJ) also bucked the trend by reporting a rise in sales.

EDS ( EDS) said after the bell Wednesday that it lost $126 million, or 26 cents a share, in the first quarter, reflecting a charge related to a computer-outsourcing pact with the U.S. Navy. Excluding charges, the EPS figure was 30 cents, a penny shy of the Wall Street consensus. EDS shares closed 2.8% lower at $17.15.

Comcast ( CMCSA) posted a first-quarter loss of $297 million, or 13 cents a share. The cable company did manage a 9% revenue gain and said high-speed Internet subscribers rose by 417,000. Comcast shares fell 0.4% to $30.28.

Whole Foods ( WFMI), a seller of organic foods, posted a 27% rise in quarterly profit, but downwardly adjusted full-year guidance. Shares slipped 12.5% to $53.01.

Goldman Sachs downgraded Nextel ( NXTL), a provider of wireless services, to underperform from in line on expectations of negative news in coming months, such as increased competition and delays in network improvements. Shares of Nextel shed 4.4% to $13.21.

Cephalon ( CEPH) disappointed investors with lackluster first-quarter sales, which fell short of analysts' estimates. The nervous-system drugmaker beat profit estimates, but shares fell 9.3% to $38.36.

An internal probe by Dutch supermarket operator Royal Ahold ( AHO) found profit overstatements totaling about $880 million at its U.S. Foodservice unit, about $400 million more than initially believed. The stock nevertheless rose 8.7% to $6.28 after the probe blamed the accounting issues on just two U.S. executives.

The Labor Department said first-time jobless benefits fell to 425,000 in the week ending May 3, slightly lower than the expected level but still stubbornly high, while the 4-week average reached a new one-year high of 446,000.

The dollar was slightly weaker against the yen, but firmer against the euro. Treasury prices were rallying, with the yield on the 10-year note at 3.67%. June Brent crude was down 10 cents at $24.05 in London.

Overseas markets were mixed, with London's FTSE 100 down 0.8% at 3959 and Germany's Xetra DAX down 1.6% at 2956. In Asia, Japan's Nikkei closed 1% lower at 8031, while Hong Kong's Hang Seng gained 0.1% to 8901.

On Wednesday, the Dow closed 0.3% lower at 8560. The S&P 500 fell 0.5% to 929, while the Nasdaq shed almost 1.1% to 1506.