Retiring with a loss, a knockout no less, is not really a sound plan. But a lot of people, mostly his family members wants him to retire.
Despite his loss he still put up a good fight, he managed to get Marquez wobbly on the fourth or fifth round and he punched Marquez's mouthpiece off in the sixth. It's quite likely that he could manage to last until the twelfth and possibly, win.
The knockout done to Pacquiao was indeed a good one though. In my opinion, Pacquiao's overconfidence And Marquez's great defense and cautiousness resulted in Marquez's victory.