Stocks fell on Wednesday, threatening to end a string of gains, after Fitch Ratings cut Portugal's credit rating on deficit concerns in the latest sign of worsening sovereign debt problems in Europe.

The three major U.S. stock indexes slightly added to the session's losses after a weak auction of five-year U.S. Treasury notes.

Portugal's rating was lowered by one notch to AA-minus as diplomats said euro zone countries have not yet agreed on a safety net for heavily indebted Greece. Government debt problems in several European countries have weighed on markets for weeks.

The fear is that these issues spread from Portugal and Greece to other countries in the region, said Alan Lancz, president of an investment advisory firm in Toledo, Ohio.

There aren't any catalysts to keep us higher after the recent gains we've had, and investors are asking what's the next shoe to drop? What's the next country to fall?

The Dow Jones industrial average <.DJI> was down 44.37 points, or 0.41 percent, at 10,844.46. The Standard & Poor's 500 Index <.SPX> was down 5.72 points, or 0.49 percent, at 1,168.45. The Nasdaq Composite Index <.IXIC> was down 14.24 points, or 0.59 percent, at 2,401.00.

The downgrade pushed the dollar up against the euro, which in turn pressured commodities. May crude futures lost 1.5 percent to $80.66 per barrel, while Chevron Corp was one of the top drags on the Dow, off 1 percent to $74.03.

Crude oil was also weighed down as U.S. inventories rose nearly five times more than expected last week, a bearish sign for demand.

Before the weak Treasury note auction, the Dow and the S&P 500 were each down about 0.2 percent, while the Nasdaq was down about 0.4 percent.

Limiting losses in the Dow was Boeing Co , the index's top boost, which rose 0.7 percent to $72.69 after Macquarie Research upgraded the stock on prospects for improved revenue.

Bank of America Corp was the Dow's top percentage gainer, rising 2.4 percent to $17.55 after it said it plans to offer about $3 billion in loan forgiveness to about 45,000 troubled homeowners in an effort to prevent foreclosures when home values drop sharply below the amount owed.

The biggest drag on the Nasdaq was Genzyme Corp , which fell 6.3 percent to $55.39 after it said the U.S. Food and Drug Administration will take enforcement action at one of its plants. Genzyme makes drugs to treat rare and chronic diseases.

Data released earlier in the day sent mixed signals about the economy, with new home sales unexpectedly falling to a record low in February but new orders for durable manufactured goods rising for a third straight month in February.

We've gotten several better-than-expected data points recently, which makes the home sales especially disappointing, Lancz said. That record low is just adding to the lack of buyers.

The session's declines follow the market's push to 18-month highs on Tuesday, with the Dow racking up a 10th day of gains out of the past 11 sessions.

For the month so far, the S&P 500 is up about 6 percent.

(Editing by Kenneth Barry)