NEW YORK (CNNMoney.com) - Stocks slipped Tuesday as a nearly four percent hike in oil prices unnerved investors. Disappointment about after-hours earnings reports from IBM, Intel and Yahoo! looked to weigh on the market Wednesday morning.

The Nasdaq composite (down 14.35 to 2,302.69, Charts) sank about 0.6 percent, after falling about 1 percent earlier in the session.

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The Dow Jones industrial average (down 63.55 to 10,896.32, Charts) also lost 0.6 percent, while the S&P 500 (down 4.68 to 1,282.93, Charts) index fell 0.3 percent.

After the close, IBM (Research) reported higher quarterly earnings on lower quarterly revenue, sending its shares down in after-hours trading.

Intel (Research) reported higher quarterly earnings and revenue that missed analysts' forecasts, sending its shares lower in after-hours trading.

Yahoo! (Research) also slumped in extended-hours trading after reporting quarterly earnings that missed forecasts.

"Following the disappointing tech news after the close, it looks like the market could be in for rough sledding at the open," said Michael Sheldon, chief market analyst at Spencer Clarke.

In addition, the headwinds of higher oil prices and fears about Iran's nuclear program threatening supplies aren't likely to go away, he added.

Sheldon said he had been looking for a bit of a pullback anyway, as stocks had gotten overbought on a technical level following the early 2006 run-up. Disappointing earnings news after the bell could provide the excuse for such a pullback.

What will be significant tomorrow, Sheldon added, is how the market reacts to the earnings news beyond the opening or early morning selloff.

As of 5:45 p.m. ET, Nasdaq and S&P futures pointed to a weaker open for stocks, when fair value is taken into account.

U.S. crude oil for February delivery jumped $2.39 to settle at $66.31 a barrel on the New York Mercantile Exchange, a gain of 3.7 percent.

"I think oil is playing a big role in the selloff," said Michael Carty, principal at New Millennium Advisors. Carty said investors were also nervous during the regular session ahead of the big batch of tech earnings that were released after the close.

Oil surged Tuesday after talk of expanded attacks on Nigeria's oil industry from militants -- as well as ongoing threats to Iran's supply amid global concerns surrounding its nuclear program.

The jump in oil prices sparked fears that the Federal Reserve may not be able to pause or end its rate-hiking cycle as soon as has been hoped, said Peter Cardillo, chief market analyst at S.W. Bach & Co.

At the same time it was feeding worries that "higher energy prices will cut into economic growth," Cardillo said. "That's outweighing any optimism about earnings."

The worry about oil prices also hit a market that was retreating after the big rally in the first seven sessions of the year.

The major gauges gained or held gains for the first seven sessions of the year, before turning negative.

Even after three down sessions, including Tuesday's big selloff, the major gauges remained solidly positive for the year, with the Dow up 1.7 percent, the S&P up 2.7 percent and the Nasdaq up 4.5 percent.

Financial markets were closed Monday in observance of the Martin Luther King Jr. Day holiday.

Blue-chip losses were broad-based, with 25 out of 30 Dow components closing lower, led by Verizon (down $0.70 to $31.48, Research), Pfizer (down $0.39 to $24.28, Research) and General Motors (down $0.55 to $19.82, Research).

Among tech stocks, chips were particularly weak, due to a slew of downgrades in the sector.

Advanced Micro Devices (down $1.27 to $32.86, Research) tumbled after Merrill Lynch downgraded the stock to "sell" from "neutral" on concerns that it will have a hard time sustaining gains going forward.

SanDisk (down $1.29 to $71.54, Research) slipped after Citigroup downgraded it to "hold" from "buy." The company makes flash memory chips.

Applied Materials (down $0.39 to $19.76, Research) and Varian Semiconductor (down $1.52 to $45.75, Research) fell after Deutsche Bank Securities downgraded the stocks to "hold" from "buy," citing valuation.

The jump in oil prices made oil one of the few positive stock sectors Tuesday. The Amex Oil (up 19.23 to 1,097.63, Charts) index gained 1.7 percent.

Guidant (up $5.38 to $76.22, Research) shares jumped after Boston Scientific (down $1.30 to $23.90, Research) boosted its offer for the medical device maker, upping the latest bid by rival suitor Johnson & Johnson (down $0.54 to $61.28, Research).

After the close, Guidant announced that it has deemed Boston Scientific's bid superior to that of J&J.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by about 7-4 on volume of 1.64 billion shares. On the Nasdaq, advancers topped decliners by 3-2 on volume of 1.73 billion shares.

In economic news, a report showed that industrial production and capacity utilization both gained more than expected in December.

A separate report showed a bigger-than-expected drop in the NY Empire State index, a regional read on manufacturing.

Treasury prices gained, lowering the yield on the 10-year note to 4.33 percent from 4.35 percent late Friday. Bond yields and prices move in opposite directions.

The dollar rose versus the euro and yen.

COMEX gold for February delivery fell $2.70 to settle at $554.30 an ounce.

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