(Updates to mid-afternoon, changes byline)
By Kevin Plumberg
NEW YORK, April 9 (Reuters) - U.S. stocks fell on
Wednesday after United Parcel Service Inc <UPS.N> slashed its
quarterly earnings forecast because of the deteriorating
economy and oil prices hit a record high above $112 a barrel,
darkening the outlook for corporate results.
The S&P 500 index fell as much as 1 percent.
Shares of UPS, considered a bellwether of U.S. economic
activity, tumbled 3.4 percent to $70.79, on track for the
largest daily decline since early November 2007. Meanwhile,
Caterpillar Inc <CAT.N> and United Technologies Corp <UTX.N>,
whose shares are sensitive to fluctuations in energy prices,
were the biggest weights on the Dow.
The lowered profit forecast from UPS fed fears that
fallout from the U.S. housing slump and credit crisis have
hurt other parts of the economy. General Electric Co <GE.N>,
which will report its results on Friday, also declined and was
the heaviest drag on the S&P 500.
"Engineering and construction companies are under
pressure. The reason is the perception that they are not going
to be spared," said Stanley Nabi, vice chairman of Silvercrest
Asset Management Group in New York.
"All of these deep industrials are under pressure on the
fear that this downturn we're in is going to broaden beyond
housing," he said.
The Dow Jones industrial average <> declined 77.92
points, or 0.62 percent, to 12,498.20. The Standard & Poor's
500 Index <.SPX> was down 11.64 points, or 0.85 percent, at
1,353.90, after hitting a session low at 1,351.59. The Nasdaq
Composite Index <> was down 31.02 points, or 1.32
percent, at 2,317.74.
GE shed 1.8 percent to $36.27 on the New York Stock
Exchange.
U.S. crude oil futures rose to a record above $112 a
barrel on a supply squeeze after government data showed a
surprising draw on crude stockpiles last week. That caused a
ripple effect on the stock market as investors factored in
higher energy costs and lower consumer spending.
The S&P retailers index declined 2.5 percent, down for the
fifth consecutive day, its longest losing streak since late
December 2007.
The Dow Jones Transportation Average <.DJT> was down 3.4
percent as well, falling for four straight days.
Shares of Morgan Stanley <MS.N> helped to drag down
financials. The investment bank said that more of its assets
became illiquid or hard to value during the first quarter.
Shares of Morgan Stanley dropped almost 3 percent to $45.98
while an S&P index of financial stocks <.GSPF> slipped 1.3
percent.
"That's part of the weakness. Morgan Stanley is putting a
little more concern back into financials," said Michael James,
senior trader at regional investment bank Wedbush Morgan in
Los Angeles.
On Nasdaq, shares of Research In Motion Ltd <RIM.TO>
<RIMM.O>, the maker of the BlackBerry, declined 2.6 percent to
$118.38. The stock was started with a "hold" rating at
Needham, a brokerage.
Apple Inc <AAPL.O>, down 1.1 percent at $151.19, also
weighed on the Nasdaq. Apple this week received its sole
"underperform" rating, from Morgan Keegan.
On Tuesday, minutes from the Federal Reserve's
policy-setting meeting showed Fed economists expected the
economy to contract in the first six months of 2008, a
scenario that could curb the appetite for stocks as profit
growth falters.
(Additional reporting by Caroline Valetkevitch; Editing by
Jan Paschal)
