Wall Street wary ahead of earnings
Major indexes fall as investors anticipate weak first-quarter corporate results; oil prices reach yet another all-time high.
NEW YORK (CNNMoney.com) -- Stocks fell Wednesday amid a bleak outlook for corporate earnings made worse by a profit warning from United Parcel Service, more signs of weakness in the financial services sector and a surge in oil prices.
The Dow Jones industrial average (INDU) fell nearly 0.4% and the broader Standard & Poor's 500 (SPX) index was down 0.8%. The Nasdaq composite (COMP) was about 1% lower.
The mood on Wall Street Wednesday was guarded ahead of what is expected to be a disappointing earnings season. First-quarter earnings for the companies in the S&P 500 are expected to fall by 13.2%, according to Thomson First Call.
"You'd be hard pressed as an investor to make a big decision before earnings season really gets under way," said Art Hogan, chief market analyst at Jefferies & Co.
Investors will get another dose of earnings news Friday when Dow component General Electric (GE, Fortune 500) announces its financial results. Thursday brings economic reports on initial jobless claims and international trade.
Commercial shipping company UPS, which is seen as a bellwether for the broader economy, added to the market's pessimism when it announced late Tuesday that it was lowering its earnings forecast.
Further depressing stocks Wednesday was news that a trio of big Wall Street banks could see more losses on risky investments that have become hard to value.
Meanwhile, the government's weekly energy inventory report showed crude stocks falling by 3.2 million barrels compared to the 2.4 million barrels that analysts were expecting.
The surprise drop spurred a rally that drove crude prices up $2.37 a barrel to settle at $110.87 for the first time.
Company news. UPS shares fell more than 3% after the shipping company said Tuesday that it expects lower quarterly profits due to higher fuel costs and falling volume. (An earlier version of this story erroneously stated that UPS is cutting jobs; CNNMoney.com regrets the error.)
UPS (UPS, Fortune 500) is considered a key indicator since it is estimated to carry goods worth more than 5% of the nation's gross domestic product on its trucks and planes.
Contradicting the bleak outlook for first-quarter earnings, Circuit City (CC, Fortune 500) said it swung to a fiscal fourth-quarter profit as cost cutting offset weak sales. Shares of the electronics retailer were roughly 3% higher.
Dow component Boeing (BA, Fortune 500) gained more than 4% despite the news that the plane maker will delay the launch of its highly anticipated 787 Dreamliner model commercial aircraft.
American Airlines (AMR, Fortune 500) stock sank more than 7% after the carrier cancelled 1,000 more flights to conduct safety inspections on its MD-80 jets.
From the financial services sector, shares of Citigroup (C, Fortune 500) were moderately higher after reports indicated that the bank is close to a deal to unload $12 billion of risky leveraged loans and bonds to a group of private-equity firms.
Investment firm Merrill Lynch (MER, Fortune 500) is likely to report a first-quarter loss and could write down an additional $6.5 billion, according to CNBC. Shares of the brokerage were about 1% lower.
The network reported that the writedowns are due not only to subprime-related investments but also to the firm's exposure to the commercial real estate market and other types of loans.
Other large investment banks, including Goldman Sachs (GS, Fortune 500), Morgan Stanley (MS, Fortune 500) and Lehman Brothers (LEH, Fortune 500), fell after the firms disclosed their exposure to certain risky kinds of investments that have become difficult to value.
Separately, Washington Mutual's (WM, Fortune 500) stock fell nearly 4% following a report in the Wall Street Journal that the thrift shunned a takeover offer from investment bank JP Morgan (JPM, Fortune 500) before accepting a $7 billion lifeline from investors led by private equity firm TPG.
Economic news. On the housing front, the White House announced details of a plan to expand the government's efforts to help homeowners who are having difficulties paying their mortgages.
The expansion would encourage lenders to write down the value of some loans in exchange for the government taking responsibility for the loans should the borrower default, according to a report in the Wall Street Journal.
Investors largely shrugged off a report from the Commerce Department that showed inventories among wholesalers rose more than expected in February.
Meanwhile, markets continued to digest meeting minutes released by the Federal Reserve on Tuesday that showed some central bankers are concerned about the possibility of a "severe and protracted downturn" in the U.S. economy.
Commodity prices. U.S. light crude oil for May delivery rose $2.37 a barrel to settle at a record $110.87 on the New York Mercantile Exchange. Crude also set a record trading high above $112 a barrel Wednesday.
COMEX gold for June delivery rose $20 to $938 an ounce.
Other markets. The dollar fell versus the euro and the yen.
Treasury prices rose lowering the yield on the benchmark 10-year note to 3.48% from 3.56%. Bond prices and yields move in opposite directions. 
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