Heavy offshore selling in third-ranked Fletcher Building helped push down the top-50 in a disappointing session.
The NZSX-50 closed down 22.4 points, or 0.6 per cent, at 3551.3, on turnover totalling $106.3 million.
Fletcher Building lost 13c, or 1.7 per cent, to 768, having hit a more than two-year low of 766 during the day. The blue chip construction and building materials stock has lost nearly 100c this month.
"The way FBU's being thrashed, it certainly seems like some significant offshore selling," said Stephen Wright of ASB Securities.
Among possible catalysts for selling were Fletcher Building's market update last week, the weakening New Zealand and United States economies, recent poor economic data, and the possibility that interest rate cuts will be pushed out.
The news was also grim for other top-10 stocks, with Fisher & Paykel Healthcare sliding 15c to a four-year low of 243.
Top stock Telecom was down 2c at 389, Contact Energy was down 6c at 909, F&P Appliances was down 10c at 217, Sky City fell 3c to 372, and Sky TV lost 4c to 437.
"I think in general amongst those leading stocks...there is some (overseas) portfolio selling going on there, but it is much more apparent in Fletcher Building and to a slightly lesser extent F&P Healthcare," Mr Wright said.
Adding to pessimism about the economy, the National Bank Business Outlook today showed business confidence remained low in May despite a small improvement, accompanied by increasing intentions to raise prices.
Also showing strong inflation pressures, a Reserve Bank survey showed business managers believed inflation would be at the top of the central bank's 1-3 per cent inflation target for the next two years.
Rakon was off 15c at 300, The Warehouse lost 8c to 535, Mainfreight fell 2c to 680, Infratil lost 4c to 224, and carpetmaker Cavalier was down 12c at 257.
Ryman Healthcare, which last week reported a strong result, was up 4c at 177, Hallenstein Glasson was up 9c at 310, TrustPower gained 9c to 834, and Port of Tauranga rose 5c to 660.
NZ Farming Systems Uruguay was up 6c at 196 after increasing its farmland in Uruguay, and confirming its annual forecast. Parent PGG Wrightson was up a cent at 227.
ING Property Trust was up a cent at 93 after reporting a 30 per cent fall in annual net profit but a 3 per cent rise in core operating profit.
Restaurant Brands was up a cent at 87 after quarterly same store sales rose 0.4 per cent across its three brands, KFC, Starbucks and Pizza Hut.
Australia's S&P/ASX 200 Index rose 0.2 per cent to 5718, and Japan's Nikkei was up 1.7 per cent.
There was no lead from Wall Street due to a long holiday weekend in the United States.