Stocks Stuck in a Funk

Updated from 4:07 p.m. EDT

Stocks flirted with 2005 lows for the second session in a row Wednesday as sinking oil prices couldn't offset earnings warnings from disparate sectors and weak retail sales.

The Dow Jones Industrial Average closed down 104.04 points, or 0.99%, to 10,403.93, the S&P 500 shed 13.97 points, or 1.18%, at 1173.79, while the Nasdaq fell 31.03 points, or 1.55%, to 1974.37, just above its six-month low of 1973.88 touched on March 29. The Nasdaq suffered its worst single-session point loss since Feb. 9, while the S&P's decline was the worst in seven weeks.

Trading volume on the New York Stock Exchange was 2.03 billion shares, with decliners beating advancers by almost a 3-to-1 margin. Volume on the Nasdaq was 1.71 billion shares, with decliners beating advancers by about 3 to 1 as well.

In other markets, the 10-year Treasury note, which jumped a half-point in price Tuesday on dovish Federal Open Market Committee minutes, was down 2/32 Wednesday to yield 4.36%, while the dollar fell against the yen and euro.

"The market is concerned about economic growth, and not earnings, when dealing with a Fed potentially raising rates," said Peter Boockvar, equity strategist with Miller Tabak & Co. "There's definitely anxiety ahead of earnings, but it will only give us an idea of just this first quarter. The market is looking much further down the line."

Oil continued to ease, with the May contract closing $1.64 lower at $50.22 in Nymex floor trading. Oil spiked lower after a government report on inventories showed that crude supplies rose 3.6 million barrels in the previous week. The Department of Energy report also showed that gasoline stocks increased by 800,000 barrels last week. The May contract has gained ground in only one of the past seven sessions, losing about 12% of its value.

"One would've expected the market to rally, after oil has dropped more than $8 a barrel," said Barry Hyman, an equity market strategist with Ehrenkrantz King Nussbaum. "You're seeing winning sectors in energy and materials being sold off with no real rotation or movement."

Stronger sectors Wednesday included drugs and health care. Weaker ones included semiconductors, biotech, retail and materials.

The Philadelphia semiconductor sector index fell 2.7% Wednesday, led lower by a 6% decline in KLA-Tencor(KLAC Quote) and a 5% decline in Novellus(NVLS Quote).

On the economic front, the Commerce Department said March retail sales increased 0.3%, much less than the expected 0.8% increase. The previous month's 0.4% gain, however, was revised higher to 0.6%. Excluding autos, retail sales were up 0.1%. Economists had projected a 0.5% increase.