Stocks pull back as oil prices rise

Stocks fell Wednesday as worries about financial companies persisted, oil prices rebounded and the government reported a drop in retail sales. The Dow Jones industrials fell more than 100 points, but other major stock indexes were down only modestly.

The Commerce Department said retail sales fell 0.1% in July despite the beneficial effect of economic stimulus payments to U.S. households. Wall Street had expected sales to be flat.

Excluding a big drop in vehicle sales, retail sales rose 0.4%. But even on that basis it was the weakest showing in five months.

Stocks also were hurt by oil prices, which rose after declining in six of the seven preceding sessions. Crude futures jumped $2.99 to $116 a barrel on the New York Mercantile Exchange after the government said U.S. crude supplies fell unexpectedly last week.

Although there were no major announcements Wednesday related to financial companies’ credit-related losses, the market was still smarting from reports that sent the Dow skidding nearly 140 points Tuesday.

“We really didn’t get any data that made us feel any better about the financials,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group.

The Dow dropped 109.51 points, or 0.9%, to 11,532.96.

The Standard & Poor’s 500 index slipped 3.76 points, or 0.3%, to 1,285.83, while the tech-focused Nasdaq composite index fell 1.99 points, or 0.1%, to 2,428.62.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange.

The Russell 2,000 index of smaller companies gained 2.75 points, or 0.4%, to 747.69.

Yields on government bonds rose. The yield on the benchmark 10-year Treasury note climbed to 3.94% from 3.90% late Tuesday. The dollar was mixed against other major currencies, while gold prices rebounded.

Financial stocks in the S&P; 500 sank 3%, marking the worst performance among the index’s major industry groups.

Bank of America dropped $2.27, or 7.3%, to $28.86, while Morgan Stanley fell $2.35, or 5.5%, to $40.15.

Investors scanned companies’ quarterly reports hoping for insights into the economy.

Deere fell $2.25, or 3.2%, to $67.10 after reporting that its earnings rose 7%, less than expected, in the quarter that ended July 31. The maker of farm and construction equipment cited growth in the global agricultural market.

Retailers mostly fell in the wake of the sales data for July. An index of retail stocks in the S&P; 500 lost 2.4%.

Target slipped $1.29, or 2.6%, to $48.07, while Home Depot lost 96 cents, or 3.5%, to $26.52. Macy’s inched up 39 cents to $20.66 despite warning that its full-year earnings would fall short of expectations because of slower sales.

In other market highlights:

* Applied Materials climbed 86 cents, or 4.7%, to $19.33. The semiconductor maker predicted late Tuesday that its orders would climb 5% to 10%, topping estimates, in its current fiscal quarter.

* General Motors fell 84 cents to $10.26 after Moody’s Investors Service downgraded its debt, citing the automaker’s challenges “in reestablishing a competitive position” in the U.S. market.

* Dr Pepper Snapple Group rose $1.13 to $22.79 after the drink maker forecast better-than-expected 2008 profit.

* Overseas, key stock indexes fell 2.1% in Japan, 1.6% in Britain, 2.5% in Germany and 2.6% in France.