US STOCKS-Profit-taking, bank tests trip market; Disney up late

                                
 * Profit-taking weighs on market after run-up
                                
 * Energy shares dip along with oil prices
                                
 * Dow off 0.2 pct; S&P 500 off 0.4 pct; Nasdaq off 0.5 pct
                                
 * For up-to-the-minute market news click [STXNEWS/US]
 (Updates with Disney shares rising late, adds volume)
                                
 By Ellis Mnyandu
                                
 NEW YORK, May 5 (Reuters) - U.S. stocks fell on Tuesday as
cautious investors fretted about impending bank stress test
results and energy shares succumbed to the pressure of lower
oil prices.
                                
 The drop halted a two-day run-up that had propelled the S&P
500 into positive territory for the year-to-date. The benchmark
index had risen 34 percent after touching a 12-year lows in
early March.
                                
 Selling was seen across the board with big-cap technology
companies, banks, home builders and big manufacturers dragging
indexes lower. These sectors have all been among the market's
bright spots during the two-month rebound.
                                
 Shares of energy company Chevron <CVX.N>, down 1.4 percent
at $65.75, were among the Dow's drags, along with those of No.2
U.S. bank JPMorgan <JPM.N>, which ended off 2.7 percent at
$34.82.
                                
 "There's a little bit of profit-taking today. You're also
probably having a bit of a breather going into Thursday, with
the stress test results although most people think this will
somewhat be a non-event," said John O'Brien, senior vice
president at MKM Partners LLC in Cleveland.
                                
 The Dow Jones industrial average <.DJI> dipped 16.09
points, or 0.19 percent, to 8,410.65 points. The Standard &
Poor's 500 Index <.SPX> shed 3.44 points, or 0.38 percent, to
903.80. The Nasdaq Composite Index <.IXIC> dipped 9.44 points,
or 0.54 percent, to 1,754.12.
                                
 Shares of software maker Microsoft Corp <MSFT.O>, off 2
percent at $19.79, was the Nasdaq's top drag, followed by
Hologic Inc <HOLX.O>, whose shares plunged 20.2 percent to
$12.45, a day after the medical diagnostics maker delayed the
U.S. launch of its Tomosynthesis mammography system and posted
a quarterly loss.
                                
 Procter & Gamble <PG.N> was the Dow's top drag, down 2.4
percent at $49.79, after news of problems at one of its
manufacturing plants. For details, see [ID:nN05401624]
                                
 DISNEY UP LATE, STRESS TESTS LOOM
                                
 After the bell, shares of Walt Disney Co <DIS.N>, another
Dow component, rose 2 percent to $23.61 after the No. 1 U.S.
entertainment company posted a quarterly profit above Wall
Street's forecasts.
                                
 Disney had ended the regular session up 1.3 percent at
$23.15.
                                
 Increasingly less dire economic reports have boosted
optimism that the economic recession that began in December
2007 may be abating, while some renewed confidence about the
banking sector underpinned sentiment.
                                
 Even so, investors fretted about the looming release of
government stress test results -- expected on Thursday -- which
may show about half of the 19 biggest banks under review need
to raise more capital.
                                
 The KBW Bank index <.BKX> -- which through Monday had risen
88 percent since March 9, slipped 1.6 percent -- with Wells
Fargo <WFC.N> down 4.04 percent to $23.27, but Citigroup <C.N>
gained 3.4 percent to $3.31.
                                
 Investors are optimistic that the largest banks do not need
dramatic new government interventions. Among banks undergoing
the tests, Citigroup, for example, has been told it will need
to boost its common equity by about $10 billion, a person
familiar with the matter said on Monday.
                                
 Tuesday's economic data showed that the vast services
sector contracted less severely in April.
                                
 Also on Tuesday, Federal Reserve Chairman Ben Bernanke said
the three-year U.S. housing bust may be near a bottom and that
he expected the recession to end this year, barring a relapse
of the financial crisis. However, he also noted U.S. growth
would remain subdued and unemployment high. [ID:nN05470010]
                                
 U.S. front-month crude <CLc1> shed 63 cents, or 1.16
percent, to settle at $53.84 a barrel on the New York
Mercantile Exchange, while the S&P Energy index slid 1.3
percent. The Dow Jones home construction index <.DJUSHB>
dropped 1.8 percent.
                                
 Kraft Foods <KFT.N> helped cushion losses on the Dow after
the maker of household brands including Oreo cookies, reported
a higher profit. [ID:nN05387053]
                                
 Like many companies this earnings season, Kraft said its
results were helped by raising prices and cutting costs,
sending its shares up nearly 4 percent to $25.22.
[ID:nN05387053]
                                
 Trading volume was active on the New York Stock Exchange,
with about 1.53 billion shares changing hands, above last
year's estimated daily average volume of 1.49 billion, while on
Nasdaq, about 2.56 billion shares traded, also above last
year's daily average of 2.28 billion.
                                
 Advancing stocks outnumbered declining ones by a ratio of
about 6 to 5 on both the NYSE and Nasdaq.