Investors were eyeing tensions in Iraq and rising oil prices Thursday. That caused stocks to drop sharply in late-day trading.

Also reported Thursday were retail sales numbers. The numbers disappointed investors and were less than expected. Retail sales rose less than expected, up 0.3 percent versus a 0.5 percent expectation.

The retail sales numbers for April were revised to raising 0.5 percent from the 0.1 percent rise that was previously reported.

Tensions in Iraq are rising, and that could be contributing to rising oil prices. Crude oil is up 1.5 percent to $105.97 a barrel.

Because of raising oil prices, transport stocks took big hits Thursday. United Continental Holdings (United Airlines), Delta Airlines and JetBlue Airways all fell steeply.

Shortly after 3 p.m., the Dow Jones Industrial Average is down 120 points.

The S&P 500 is down 15 points or 0.79 percent. Utilities are among the leaders that lost the most Thursday.

The CBOE Volatility Index or the VIX, which measures investor uncertainty, was up over 8 percent Thursday, indicating that investors are not confident in the market. This caused gold prices to rise 0.9 percent, up to $1,272.50 an ounce.

Stocks in Focus

Lululemon (LULU) shares hit a more than three-year low after revising its revenue and earnings forecast to reflect lower numbers for the fiscal year. It also announced its CFO would retire early next year. The Canadian yoga-wear company was a hugely popular stock in the last three years, and investors climbed all over it. Now, it is unclear whether or not the company can turn around.

Twitter (TWTR) shares are up over 4 percent after their COO said he would step down. The company was also upgraded to a buy rating from a hold rating by Cantor Fitzgerald.

Ford (F) shares are down over 2 percent after the automaker announced it would have to decrease its MPG rating on certain 2013 and 2014 hybrid vehicles.