High Oil, Low Dollar Leave Stocks Drooping

Stephen Carl, head equity trader with Williams Capital, pointed out that exchange-rate gains, while strong at the moment, "aren't the most fundamentally sound aspect of future revenue streams."

Further, Bruce Zaro, chief technical strategist with Delta Global Advisors, commented that a number of stocks have already had healthy numbers baked into their shares. As a result, he said, "unless they're getting blowout earnings, investors are using earnings reports to sell."

He added that this earnings season is among the most important in the last three years. "Investors are really starting to see what the corporate results will look like in a slowdown or recessionary period," he said.

Also reporting was AT&T (T Quote), which tacked on 0.6% after adjusted earnings climbed 10.3% to $4.5 billion on sales of $30.7 billion, meeting the consensus analyst target.

Away from the Dow names, Royal Bank of Scotland (RBS Quote) dropped 4.7% after saying that it wrote off another $11.75 billion in bad assets and plans to cut its 2008 dividend and launch a $23.9 billion equity offering.

Elsewhere in the financial space, SunTrust (STI Quote) missed Wall Street's targets with dwindling earnings of 81 cents a share, but the stock still gained 0.6%.

Similarly, Fifth Third (FITB Quote) climbed 8% even though the regional bank sustained further damage from its housing-market exposures, which helped take down its first-quarter profit down by 19%. The numbers nonetheless topped analyst projections.

"Those financials are so resilient," Carl said. "I guess it's the lesser of two evils. Everyone's expecting horrible things, and the numbers coming in are not good, but they're also not as anemic as people think."

Over in the tech sector, Texas Instruments (TXN Quote) pegged its second-quarter results at the lower end of analyst targets and said it's pulling back on manufacturing activity at its factories, citing economic concerns. First-quarter earnings were in line with expectations, but shares still sank 5.8%.

Also taking its lumps was Netflix (NFLX Quote), which plunged 23.7% after the movie-rental company shaved a penny off its full-year outlook and predicted that new-customer growth would slow down in the current quarter. For the first quarter, the company saw surges both in income and in new-customer acquisitions.

United Airlines parent UAL Corp. (UAUA Quote) plummeted 36.8% as increasing fuel costs spurred a steeper-than-expected shortfall, and the company announced it will lay off 1,100 workers. JetBlue (JBLU Quote) managed to tighten its quarterly loss to 4 cents a share, topping analysts' views, but its shares were still down 5.7%.

In another sign that the housing crisis is probably a long way from over, the National Association of Retailers reported that March existing-home sales slipped by 100,000 from the prior month to a 4.93 million annual rate, a hair better than what economists were expecting.

Based on current sales trends, housing inventory, which ticked up 1% last month, should take about 9.9 months to work through. Also, the median price for existing homes slid 7.7% year over year to $200,700.

Following that news, homebuilders D.R. Horton (DHI Quote) Lennar (LEN Quote), Pulte Homes (PHM Quote) and Centex (CTX Quote) all lost 2% or more.

As for notable analyst actions, Lehman Brothers began IBM (IBM Quote), Apple (AAPL Quote) and Hewlett-Packard (HPQ Quote) with overweight ratings, but shares of the companies still lost ground for the day.

Treasury prices were rising. The 10-year note added 10/32 in price to yield 3.69%, and the 30-year bond jumped 26/32 in price, yielding 4.44%.

Markets abroad were mostly lower. In Asia, Tokyo's Nikkei 225 sank 1.1%, but the Hang Seng Index in Hong Kong rose 0.9%. Among European exchanges, the FTSE in London eased by 0.3%, Germany's Xetra Dax fell 0.9%, and the Paris Cac gave back 0.8%.

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