NEW YORK (AFP) - US shares slid as crude oil surged toward yet another record and the pharmaceutical sector was hit by a a report that a key Pfizer drug may have similar problems to Merck's Vioxx.
The Dow Jones Industrial Average dropped 65.04 points, or 0.64 percent, to 10,174.88 and the tech-heavy Nasdaq composite shed 14.30 points, or 0.73 percent, to 1,956.73 at 1550 GMT.
The broad-market Standard and Poor's 500 index retreated 7.81 points, or 0.68 percent, to 1,134.24.
New York's main crude oil contract shot to 53 dollars a barrel for the first time as fears rose for heating oil supplies in the US winter.
The price of oil and less-than-rosy sales results from retailers raised concerns about the pace of future economic growth.
"Energy costs are dramatically higher than the prior year and it's affecting the retail numbers," said Barry Hyman, equity market strategist at Ehrenkrantz King Nussbaum.
Wal-Mart reported a disappointing 2.4 percent rise in same-store sales for September.
"You saw a low end report from Wal-Mart, the biggest player. You could say it was within range but think of where it was a year or two ago in terms of sales. They were at the six to eight percent level," Hyman said.
"As the world's largest importer of crude, all of a sudden prospects for the once hot US economy don't look so hot anymore," says CIBC World Markets chief economist Jeff Rubin.
"And just as suddenly, the hundreds of basis points of central bank tightening that investors had braced their portfolios for are rapidly being priced out of the market. Instead of losing momentum along an arduous march to higher interest rates, the North American economy will soon be feeling the brake of soaring energy prices."
Pfizer meanwhile tumbled on a New England Journal of Medicine article which suggested the entire family of arthritis drugs to which Vioxx belongs, may offer similar risks of cardiovascular problems.
Pfizer manufactures Celebrex, a treatment which has been touted as a safe alternative to Vioxx, which was withdrawn by Merck last week after being linked to increased cardiac risks.
Shares of Pfizer slumped 1.62 or 5.2 percent to 29.56, while Merck lost 1.09 or 3.4 percent to 30.56.
In retail, Wal-Mart was unchanged at 53.98, while Sears rose 91 cents to 40.18 and Target added 79 cents to 47.89.
Genentech slid 2.50 or five percent to 47.74 after a downgrade from SG Cowen on valuation grounds even though the biotech firm posted a 50 percent rise in quarterly earnings.
Delta Air Lines dropped 38 cents to 3.47, a drop of nearly 10 percent after warning that it faces an increasingly difficult financial situation as a result of soaring fuel prices.
Bonds remained under pressure. The yield on the 10-year US Treasury bond climbed to 4.234 percent from 4.224 percent Wednesday and that on the 30-year bond rose to 4.978 percent from 4.970 percent. Bond yields and prices move in opposite directions.