Updated from 4:18 p.m. EDTStocks recorded more losses Tuesday as soaring crude prices and poor numbers from Swedish handset maker Ericsson ( ERIC) spooked buyers. The Dow Jones Industrial Average fell 71.86 points, or 0.5%, to 13,913, after earlier having been off by 100. The S&P 500 dropped 10.18 points, or 0.7%, to 1538.53, and the Nasdaq Composite surrendered 16.14 points, or 0.6%, at 2763.91. Crude prices rallied to all-time highs as a conflict between Turkey and Kurdish rebels in Iraq stoked fears of a decline in oil output and general instability in the Middle East. Oil rose $1.48 to $87.61 a barrel, having touched a record of $88.20 earlier. Crude is now up 9% over the last week. "Oil needs to persist at these highs first for it to be a real serious problem that we can blame the market decline on," said Edgar Peters, chief market analyst with Pan Agora. "While higher oil is a problem, there has been negative sentiment building after the markets hit highs last week. A lot of this is merely profit-taking." Energy stocks were again among few winners of the day. The Amex Oil Index rose 0.7%, led by gains in Chevron ( CVX), Occidental Petroleum ( OXY), ConocoPhillips ( COP) and BP ( BP). Among the worst decliners, the KBW Bank Index dropped 2.1%, and both the S&P Retail Index and the Dow Jones Transportation Average lost 1.1%
Breadth was weak. On the New York Stock Exchange 3.18 billion shares changed hands, as decliners topped advancers by an 8-to-3 margin. Volume on the Nasdaq reached 2.03 billion shares, with losers outpacing winners nearly 9 to 5. On Monday, a spike in oil combined with weak earnings news from Citigroup ( C) to sink the major averages. Ahead of the new session, Ericsson pressured tech stocks after warning that third-quarter sales would come in lower than expected. The handset maker blamed the sluggish performance on soft mobile-network upgrades. Shares fell more than 23% to $31.33. Ericsson's loss hit London's FTSE 100, which gave back 0.5%. Germany's Xetra Dax slid 0.1%. Asia's markets also fell overnight. Hong Kong's Hang Seng dropped 2%, and Japan's Nikkei 225 lost 1.3%. Back in the U.S., traders had to contend with another flood of earnings, but many more are on the way in the coming days and weeks. Delta Air Lines ( DAL) posted a third-quarter profit of $220 million, or 56 cents a share, and said revenue grew year over year. Delta tacked on 8 cents, or 0.4%, to $20.08. Johnson & Johnson ( JNJ) traded lower despite beating third-quarter earnings estimates on an adjusted basis. J&J also raised its full-year guidance. The stock, however, eased 58 cents, or 0.9%, to $65.07. Homebuilder D.R. Horton ( DHI) said that fourth-quarter net sales were nearly halved to $1.3 billion from a year ago. The company blamed cautious buyers and a tough housing environment due to mortgage problems. Shares of the homebuilder slumped 72 cents, or 5.3%, to close at $12.86.
D.R. Horton's warning came a day after Federal Reserve Chairman Ben Bernanke addressed the New York Economic Club about the recent credit crisis and its impact on consumers and the housing sector. Bernanke said that "it remains too early to assess the extent to which household and business spending will be affected by the weakness in housing and the tightening in credit conditions." He added that "the further contraction in housing is likely to be a significant drag on growth in the current quarter and through early next year." Several finance names were also out with results. State Street ( STT) beat estimates, while U.S. Bancorp ( USB) was in line. State Street gained $5.75, or 8.3%, to $74.68, and U.S. Bancorp was down 16 cents, or 0.5%, to $32.35. KeyCorp ( KEY), on the other hand, said that third-quarter earnings missed targets. The company also guided the fourth-quarter below consensus. Regions Financial ( RF) and Wells Fargo ( WFC) also fell short. KeyCorp lost 5.9%, Wells Fargo dropped 3.9%, and Regions finished 2.1% lower. Among those reporting after the closing bell, the big tech trio of Intel ( INTC), IBM ( IBM) and Yahoo! ( YHOO) all reported earnings that were better than expected. On the economic docket, the Fed said that industrial production rose an expected 0.1% last month. Capacity utilization held steady at 82.1%. Treasury prices rallied. The 10-year note added 6/32 in price, cutting the yield to 4.65%. The 30-year bond was up 4/32 to yield 4.90%.