Stocks Close Lower; Inflation Fears Rise

NEW YORK (TheStreet) -- Stocks finished lower Tuesday as investors absorbed data showing wholesale inflation and the manufacturing picture muddled.

The Dow Jones Industrial Average fell by 49 points, or 0.5%, to 10,452 and the S&P 500 went lower by 6 points, or 0.6%, to 1108. The Nasdaq declined by 11 points, or 0.5%, closing at 2201.

Lagging banking stocks weighed on the Dow in the afternoon, as both Bank of America(BAC) and JPMorgan Chase(JPM) shed 2.8% and 2.2%, respectively. The KBW Bank Index fell 2.9%.

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Walt Disney(DIS) led percentage gainers on the Dow, climbing 1.1%.

A brighter oil service sector helped limit equity losses amid mounting headwinds Tuesday. The Philadelphia Oil Service Sector Index advanced by 1.4% in the afternoon. Helping support oil services was news that the Organization of Petroleum Exporting Countries increased its 2010 demand estimates, which in turn helped prop up oil futures Wednesday. Crude oil for January delivery improved Tuesday by $1.18 to settle at $70.69 a barrel, following a nine-day losing streak, even as the dollar index rose nearly 0.8%.

Energy costs also boosted producer prices at a faster-than-expected rate in November as the PPI rose 1.8% compared with expectations for an increase of 0.8% and with October's 0.3% uptick.

Excluding volatile energy and food costs, the index was 0.5% higher and still surpassed expectations for a rise of 0.2%. Core producer prices fell 0.6% in October.

The unexpected surge in wholesale prices came as the Federal Reserve meets to discuss monetary policy ahead of its rate statement on Wednesday afternoon.