U.S. stocks faltered on Wednesday after a three-day rally as a strengthening dollar and data showing a rise in U.S. fuel supplies sent crude oil prices lower, hurting energy stocks.

The euro dropped to a fresh three-week low against the dollar as investors unwound risky trades in commodities and higher-yielding currencies and bought back the greenback in a flight to quality bid.

The market's decline was broad, with six stocks falling for every one rising on the New York Stock Exchange.

Energy and materials, two sectors that have been laggards, led the decline as U.S. crude futures dropped more than $5 per barrel. Concerns about growth in China hit cyclical sectors, which have teetered on worries about global demand. Losses in oil were exacerbated following U.S. inventory data from the Energy Information Administration.

With the dollar continuing to strengthen, commodities like oil should continue to trade off, given the inverse relationship between the dollar and some of these commodities, said Phil Orlando, chief equity market strategist, at Federated Investors, in New York.

All these different issues -- currencies, the commodities, equity prices, the risk trade -- all seem to be somewhat interrelated.

The Dow Jones industrial average <.DJI> dropped 142.36 points, or 1.12 percent, to 12,618.00. The Standard & Poor's 500 Index <.SPX> fell 14.66 points, or 1.08 percent, to 1,342.50. The Nasdaq Composite Index <.IXIC> lost 28.34 points, or 0.99 percent, to 2,843.55.

A rise in the greenback reduces the appeal of dollar-priced commodities, which become relatively more expensive.

The S&P energy sector <.GSPE> slid 3 percent to be the worst performing S&P sector and hit its lowest intraday level since March 17. Chevron Corp fell 2.5 percent to $101.73 and Exxon Mobil Corp lost 2.3 percent to $80.98.

A report from China showed industrial output growth eased in April, suggesting the world's second-biggest economy was moderating the pace of expansion, although Chinese inflation remained high.

Before Wednesday's decline, the benchmark S&P 500 had risen 1.7 percent over the past three days.

Dow component Walt Disney Co fell 4.8 percent to $41.80 a day after its quarterly revenues missed expectations.

Among the few bright spots, Macy's Inc jumped 8.3 percent to $28.51 after its profit topped estimates. The department store chain also offered an optimistic outlook for the rest of 2011.

Through Wednesday, 450 of the S&P 500 companies had reported, with 69 percent posting results above analysts' expectations, according to Thomson Reuters data.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)