The S&P/TSX composite index closed down 117.52 points at 14,653.12 as oil and metals prices retreated.
Meanwhile, Statistics Canada said retail sales fell 0.1 per cent to $42.5 billion in April following gains in February and March. That surprised economists who had forecast an increase of 0.7 per cent.
On commodity markets, the July crude contract closed down 84 cents at US$59.61 a barrel, while August gold eased 10 cents to US$1,201.90 an ounce and July copper fell almost four cents to US$2.57 a pound.
The loonie lost 0.26 of a U.S. cent to 81.53 cents.
U.S. indexes were also solidly in the red, giving back a big chunk of Thursday's Fed-boosted gains as the Dow Jones industrials lost 99.89 points to 18,015.95 or more than half of its 180-point advance the previous session.
The Nasdaq, which closed at an all-time high on Thursday, was 15.95 points lower at 5,117 and the S&P 500 declined 11.25 points to 2,109.99.
Analysts said much of Thursday's gain could be traced to the dovish stance on interest rates taken by the U.S. Federal Reserve at the conclusion of its two-day policy meeting on Wednesday.
The U.S. central bank lowered its growth forecasts for the American economy, hinting that it was in no rush to raise historically low rates and that an increase, when it does come, will likely be moderate.
Kevin Headland, director, capital markets & strategy, Manulife Asset Management, said that after Thursday's "pop" on U.S. markets some giveback as almost inevitable.
"I think the Fed's announcement was somewhat expected but the market kind of reacted like it wasn't expected," he said of the "knee-jerk" reaction.
"We saw that with the oil prices sliding downwards. We've seen that in the past with gold, both sides. The market tends to always overreact and then eventually correct itself and finds a nice landing spot somewhere in the middle."
And while news from the Fed and on Greece's sovereign debt crisis continue to periodically roil markets everywhere, weaker economic fundamentals in Canada compared with the United States is an added burden on the TSX.
"(Our market) is a bit hesitant due to a lack of consumption growth in Canada and of course the lack of demand for natural resources," with a pickup in oil, in particular, unlikely in the near future.
"Therefore the TSX doesn't seem to be very positive over the next little while," he said.
Meanwhile, with markets entering the summer doldrums, many traders continue to look to the Fed for direction while preparing for the next round of U.S. earnings reports.
Until then, "its probably going to be a fairly sideways market."