Stocks decline as oil rises, Street examines earnings

AT&T's earnings met Wall Street's forecast while McDonald's and DuPont reported stronger-than-expected numbers. But DuPont said a U.S. slowdown will offset growth abroad and McDonald's said an important metric of its sales showed a decline for March. All three companies are among the 30 stocks that make up the Dow.

The comments gave trading a cautious tone. With hundreds of companies still to report results, investors are anxious over what the figures might say about the prospects for the economy.

"We've melted here, but it isn't a plunge," said Art Hogan, chief market analyst at Jefferies & Co. "We're in a day-to-day assessment of how good earnings season is, and right now there's more bad news than good news the parade has been less positive than we've anticipated."

Investors appeared little moved by news of continued weakness in the housing sector. Sales of existing homes fell 2 percent in March to a seasonally adjusted annual rate of 4.93 million units, while the median sales price dropped for a seventh straight month. The National Association of Realtors also said sales rose in the Northeast and West but fell in the Midwest and South.

Oil's seemingly relentless march higher this year raises the specter of higher inflation that would lead consumers to cut back their discretionary spending. It would also make the Federal Reserve less likely to keep lowering interest rates.

Light, sweet crude rose $1.89 to $119.37, having slipped back in the normal ebb and flow of trading. But it appeared inevitable that crude would pass $120.

In late afternoon trading, the Dow fell 134.02, or 1.04 percent, to 12,691.00. The blue chip index was near its lows of the session.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 13.80, or 0.99 percent, to 1,374.37, and the Nasdaq composite index fell 34.04, or 1.41 percent, to 2,374.00.

Bond prices edged up. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.71 percent from 3.73 percent late Monday. The dollar was mixed against other major currencies, while gold prices rose.