Oil Prices Weigh on Stocks

"Even if the Fed pauses, the market now has mostly discounted the move, or lack thereof," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "Earnings are mostly behind us, inflation will persist as a problem, the midterm elections are coming up, and all eyes will soon shift to the Fed meeting in September."

Among earnings, natural gas company El Paso(EP Quote) said second-quarter net income rose to $141 million, or 21 cents a share, reversing a year-ago loss of $246 million, or 38 cents a share. Operating revenue totaled $1.21 billion, up from $1.17 billion last year. Results beat the Thomson First Call consensus for EPS of 18 cents on revenue of $1.17 billion. Still, El Paso was lower by 81 cents, or 5.2%, to close at $14.76.

Hansen Natural(HANS Quote) posted second-quarter earnings of $28.2 million, or 28 cents a share, nearly doubling year-ago results. However, the beverage maker reported revenue of $156 million for the quarter, falling short of estimates. Shares plummeted $10.40, or 25.8%, to $29.85.

Apple Computer(AAPL Quote) finished lower after its 2006 World Wide Developers Conference began. The company demoed its new OS X Leopard operating system during the conference, which is set to compete head-to-head with Microsoft's(MSFT Quote) long-delayed Vista operating system, and introduced new Mac Pro computers with Intel(INTC Quote) chips.

Even so, the company's stock-option woes remain the focus for many investors. The Wall Street Journal reported that several option grants given to executives were dated just before big increases in Apple's stock between 1997 and 2001. Apple shares closed down $1.09, or 1.6%, to $67.21.

Meanwhile, Prudential cut its earnings and revenue estimates for Intel on the belief that demand for the company's Core 2 Duo chip will be lighter than expected. The firm now expects Intel to have full-year earnings of 75 cents, down from a previous forecast of 81 cents. Prudential dropped its revenue target to $36.13 billion from $37.11 billion. Intel gave back 17 cents, or 1%, to $17.32.

The Philadelphia Semiconductor Sector Index was lower by 0.6% for the session following Intel's loss.