NEW YORK ? Wall Street stocks retreated Tuesday with investors turning skittish in the face of mixed economic news and as a two-day Federal Reserve meeting on monetary policy got under way.

A lackluster 2010 outlook from US conglomerate General Electric late in the day kept the market from generating any positive momentum.

The Dow Jones Industrial Average dropped 49.05 points (0.47 percent) to close at 10,452.00, a day after the blue chip index's highest close since October 2008.

The technology-rich Nasdaq composite lost 11.05 points (0.50 percent) to 2,201.05 and the Standard & Poor's 500 index shed 6.18 points (0.55 percent) to close at 1,107.93.

Sentiment took a hit from data showing a surprising 1.8 percent jump in US wholesale prices, including a 0.5 percent gain in core inflation excluding food and energy.

The report "increased concern the Federal Reserve may have to address rising inflation and reduce stimulus measures," said Scott Marcouiller at Wells Fargo Advisors.

"While some analysts dismissed the increase as a mere rebound from October's remarkably low levels, others seized on the data as evidence of a growing inflationary threat," said Andrea Kramer at Schaeffer's Investment Research.

"Against this backdrop, the major market indexes spent most of the day swimming in red ink."

A more positive surprise came on industrial production, which rose a stronger-than-expected 0.8 percent last month.

Joel Naroff at Naroff Economic Advisors said the report on prices might send a chill through the markets but added that "the large rise in industrial production should be a signal that the recovery is on track."

The start of the Fed meeting reminded investors that the central bank will have to pull back from its stimulus at some point to keep inflation in check. The central bank has kept its federal funds rate in a range of zero to 0.25 percent for the past year.

"There are no expectations that the Fed will change its target rate for fed funds, but there is some thinking that the policy group may alter the language in the statement that could suggest the Fed is getting closer to withdrawing some of the massive stimulus it has supplied over the last year," said Gregory Drahuschak at Janney Montgomery Scott.

Among stocks in focus, GE fell 1.25 percent to $15.75 after the conglomerate involved in energy, finance and media projected flat revenue and profits for 2010 at an investor update.

Wells Fargo rose 0.67 percent to $25.66 after the banking giant announced plans to repay the US Treasury for a $25-billion capital injection, the last of the major banks to repay bailout funds.

But other banks were weaker: Citigroup fell 3.78 percent to $3.56 a day after announcing its plans to emerge from the bailout. JPMorgan Chase shed 2.18 percent to $40.86 and Goldman Sachs dropped 2.02 percent to $162.74.

Boeing drifted down 0.68 percent to $55.67 as it completed its maiden test flight for its new 787 Dreamliner aircraft.

Bonds fell after the steeper-than-expected inflation figures. The yield on the 10-year US Treasury bond rose to 3.603 percent from 3.546 percent Monday while that on the 30-year bond increased to 4.533 percent against 4.475 percent.