Stocks closed lower as a pullback from $100-a-barrel oil clipped energy stocks and weak economic reports added to investor fears that a recession is looming.
The Dow Jones Industrial Average and Standard & Poor's 500 index were off more than 1 percent with an hour left in trading, while the tech-gauge Nasdaq surrendered strong early gains to post a loss near 1 percent.
Oil dropped on news that crude supplies rose by 4.2 million barrels, almost twice as much as expected, and as billionaire investor Boone Pickens told CNBC he was short-selling the commodity and expects prices of oil and natural gas to fall up to $15 a barrel in the second quarter.
Meanwhile, the Philadelphia Fed reported that its gauge of regional factory activity fell to minus 24 in February from an already weak minus 20.9, which had been its worst reading since the 2001 recession. Economists had expected a slight bump up in the gauge to minus 11.
Oil slipped toward $98 a barrel, and the decline brought with it the stocks of energy majors, including Dow components ExxonMobil and Chevron.
It was a good day for techs, as more good news trickled in, building on the sector's momentum from H-P's better-than-expected results.
American depositary shares of Research In Motion jumped after the Canadian company raised its fourth-quarter subscriber outlook, citing strong demand for its BlackBerry smart phones over the holidays. The company also backed its revenue and earnings outlook, which calls for revenue of $1.80 billion to $1.87 billion and earnings per share between 66 cents and 70 cents.
Meanwhile, Citigroup upgraded its rating on networking-gear maker Cisco to "buy" from "hold."
Microsoft surrendered early gains after the software giant announced that it would increase transparency and information sharing by making key elements of some of its best-selling software products widely available. Microsoft will publish on its site key software blueprints, known as application program interfaces, Reuters reported.
Retailers were mostly higher but discount retailer Target remained lower after Citigroup cut its rating on the stock to "sell" from "hold."
Speculation is swirling that Delta and Northwest could announce their merger as early as today. Such a tie-up would create the largest U.S. airline by traffic, but shares of both companies tumbled.
Also among the big losers of the day was Apollo Group , a private sector education provider looking, like the rest of the industry, to quell investor anxiety about what effect the tightening of education loan standards will have on school enrollment. Shares across the sector were down nearly 8 percent.
One of the biggest percentage gainers of the day was HLTH Corp., an Elmwood Park, N.J. health-information company whose shares soared after it reported sharply lower quarterly profits but said it would merge into its subsidiary WebMD.
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