U.S. Stocks Slip on Crude Oil, Fall Hard

The Fed has lowered its fed funds target rate by 325 basis points since last September as part of its effort to stem the credit crises that has been plaguing financial firms, but during that time, energy and food prices have been soaring, leading to worries that inflation rates could rise too far, too fast.

Those comments, combined with the productivity data, were supporting the dollar, which rose across the board. The euro lost 0.8% to $1.5398, and the yen closed off 0.2% at 104.86. The British pound sank 1% to $1.9527.

At the same time, gold futures ended down $6.50 to $871.20 an ounce.

Elsewhere, traders were taking in stride another report showing a drop in home sales. The National Association of Realtors said that pending home sales in March fell 1%, meeting expectations. February's decline was revised to 2.8%.

Among companies, tech bellwether Cisco Systems (CSCO Quote) reported coming in ahead of analyst expectations last quarter with an adjusted profit of $2.3 billion, or 38 cents a share. Sales ramped up 10.4% to $9.8 billion. Still, shares were shed 2.1%.

Meanwhile, fellow tech names Sprint (S Quote) and Clearwire (CLWR Quote) confirmed they are planning to merge their wireless broadband businesses.

The new company, to be named Clearwire, is set to receive a $3.2 billion collective investment from Intel (INTC Quote), Google (GOOG Quote), Time Warner Cable (TWC Quote) and Bright House Networks.

Sprint shares erased early gains to finish down slightly at $9.16, and Clearwire also reversed course to lose 1.5%.

Back on the earnings front, digital television purveyor DirecTV (DTV Quote) said its first-quarter profit swelled by 10% to a better-than-anticipated $371 million, on a top line that surged 17% to $4.6 billion. The stock gained 4.7%.