By Anora Mahmudova and Sara Sjolin, MarketWatch

Producer prices fall in February; Consumer sentiment slides in March

NEW YORK (MarketWatch)--U.S. stocks suffered sharp losses on Friday and the main indexes looked set to register steep losses for a third week in a row, finishing what has turned out to be a turbulent five-day trading stretch.

Investors grappled with a set of mixed economic reports over the week, with each data set shifting expectations of the first rate hike, while heightened volatility amplified moves on Wall Street.

Friday's producer prices report showed a surprise drop, indicating persisting deflationary pressures. Meanwhile, consumer sentiment slid in March, falling more than experts had forecast.

Delivering another dollop of worry to the dour mood on the Street was renewed selling in oil prices triggered by a report pointing to heightened production.

The S&P 500 (SPX) saw broad-based losses, with all 10 main sectors trading lower.

The Dow Jones Industrial Average (DJI) dropped more than 200 points, with all of its 30 members trading lower.

The Nasdaq Composite (RIXF) also fell.

"Volatility in the stock market rose since the end of tapering last October, which we see as the first de facto tightening," said Daniel Skelly, lead portfolio manager at Morgan Stanley Wealth Management. "While we still see modest returns this year, likelihood of more choppy trades is high."

Skelly noted that mixed economic picture, especially lack of wage growth, overall slack in the labor market and the fragile state of the rest of the world economy provide enough reasons for the Federal Reserve to be hesitant with an interest-rate increase this year. Regardless, Skelly thinks market reaction to the eventual hike will be measured.

The Federal Open Market Committee meets on Tuesday and Wednesday, and although no rate changes are expected, investors will closely be watching Chairwoman Janet Yellen's news conference for hints on how patient the central bank will be before tightening its monetary policy.

Eric Wiegand, senior portfolio manager at U.S. Bank Wealth Management, said the Federal Reserve will probably remove the word "patient" from the statement but is likely to have a very moderate wording to soothe the market in light of falling inflation and overseas developments.

Friday's data: The University of Michigan's consumer sentiment index dropped to its lowest level since November.

Separately, despite the first rise in gasoline costs since last summer, U.S. producer prices fell in February for a fourth straight month, mainly because of a sharp drop in volatile category of retail trade margins.

Earnings: Clothing retailer Ann Inc.(ANN) delivered a surprise fiscal fourth-quarter profit, as both total sales and same-store sales beat expectations. Shares jumped 8%.

Movers and shakers: Shares of AĆ©ropostale Inc.(ARO) dived 14% after the apparel retailer said it forecast a larger-than-expected loss in the first quarter.

FXCM Inc.(FXCM) surged 26% after the foreign-exchange broker's fourth-quarter earnings released on Thursday topped consensus estimates (http://www.marketwatch.com/story/fxcms-stock-rallies-after-better-than-expected-profit-sales-2015-03-12).

Herbalife Ltd.(HLF) jumped 8% after a Wall Street Journal report that federal investigators were interviewing people connected to hedge-fund billionaire Bill Ackman in a possible stock-manipulation probe (http://www.marketwatch.com/story/ackmans-people-interviewed-in-potential-herbalife-manipulation-probe-2015-03-12).

eBay Inc.(EBAY) picked up 1.1% ahead of the bell after Susquehanna Financial upgraded the company to positive from neutral.

Other markets: In Asia, the Nikkei Average jumped above 19,000 for the first time since April 2000 (http://www.marketwatch.com/storyno-meta-for-guid). European markets were mixed, while the U.K.'s FTSE 100 index moved between gains and losses (http://www.marketwatch.com/storyno-meta-for-guid), hit by utility shares.

Crude oil accelerated losses after the International Energy Agency said the recovery for oil prices remains fragile (http://www.marketwatch.com/story/iea-oil-price-recovery-still-fragile-2015-03-13) amid a production rebound in the U.S. and brimming inventories.

Most metals rose, while the ICE dollar index (DXY) climbed above 100, for the first time since March 2003.

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