Stocks slide for second session
Blue chips lower as oil prices rise, financial issues get hammered.
NEW YORK (CNNMoney.com) -- Stocks tumbled for a second session Wednesday, as higher oil prices, lackluster retail sales and more financial market malaise rattled investors.
The Dow Jones industrial average (INDU) lost 0.9%, while the broader Standard & Poor's 500 (SPX) index lost 0.3%. The Nasdaq composite (COMP) lost two points.
Wall Street tried for a mid-afternoon comeback after oil prices trimmed gains, but a fresh wave of financial stock selling took its toll late in the session.
The markets fumbled Tuesday as well, as JPMorgan Chase and other financial companies got hammered on the latest credit market woes. Those concerns continued Wednesday and were compounded by the retail sales report and rise in oil prices.
Major financial companies such as AIG (AIG, Fortune 500), Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500) and American Express (AXP, Fortune 500) led the decline.
Oil companies were among the few gainers on the Dow, including Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500).
"The market is coming down today due to the decoupling after the stronger dollar and lower oil price-driven rally over the last week," said Peter Cardillo, chief market economist at Avalon Partners.
Cardillo said that while the dollar was holding its own, oil was up a lot, so the market was ignoring the dollar.
Thursday morning brings the weekly jobless claims report and the July reading on consumer prices (PPI). On the earnings front, Wal-Mart Stores (WMT, Fortune 500) and Urban Outfitters (URBN) both report quarterly results.
Fuel prices: U.S. light crude oil for September delivery rose $2.99 to settle at $116 a barrel on the New York Mercantile Exchange after having touched a session high of $117.15 earlier.
Prices rose after the government's weekly inventory report showed weakness in oil and gasoline supplies. Also, investors were tracking fighting between Russia and Georgia, which has continued despite an announced cease-fire Tuesday. Georgia serves as an important hub for transporting fuel between Asia and Europe. (Full story).
Retail gas prices dropped overnight, extending a downward trend for a 27th day, according to a survey of gas station credit-card activity. (Full story).
Retail sales: July retail sales fell 0.1% from the previous month, in line with estimates and reflecting the end of the impact from the government stimulus checks. Sales excluding autos rose 0.4%, the government said, with results falling short of the expected rise of 0.5%. (Full story)
Autos: General Motors (GM, Fortune 500) shares slumped 7.6% after Moody's cut its debt rating deeper into junk territory and kept the outlook negative, which could imply another cut 12 to 18 months out. The automaker has been struggling to generate cash flow and has seen record oil prices cut into its sales of trucks and sport utility vehicles.
Ford (F, Fortune 500)'s top U.S. executive said that the company won't have a problem weathering the downturn in the economy or the auto industry. Ford fell nearly 6%.
Meanwhile, privately owned Chrysler said it is investing $1.8 billion in a Detroit assembly plant to be used to make new car-based SUVs.
Earnings: Applied Materials (AMAT, Fortune 500) reported sales and earnings late Tuesday that tumbled from a year ago due to the tough industry environment. Nonetheless, results edged out analysts' estimates. Shares gained 4.7%.
Deere (DE, Fortune 500) reported higher third-quarter sales and earnings that topped sales forecasts but missed earnings expectations. The tractor maker also warned that higher raw material costs would crimp fourth-quarter profit margins.
Deere (DE, Fortune 500) shares fell 3.2% and dragged on Caterpillar (CAT, Fortune 500) and other equipment makers.
Toll Brothers (TOL, Fortune 500) warned that home-building revenue fell about 34% in the fiscal third quarter because of the housing market collapse. The luxury homebuilder also reported a big drop in net contracts signed, and said that it is not comfortable providing an earnings outlook due to the state of the market.
However, analysts were expecting a bigger drop in home-building revenue, and Toll stock managed to end a bit higher.
Home Depot (HD, Fortune 500) slipped 3.5% after a Standard & Poor's analyst cut his second-quarter earnings forecast on the retailer, saying he expects slower same-store sales growth.
Deals: Drug store chain CVS Caremark (CVS, Fortune 500) said it is buying Longs Drug Stores (LDG, Fortune 500) for $71.50 per share in cash or $2.7 billion. The acquisition was announced late Tuesday. CVS shares were barely changed and Longs Drug Stores rallied nearly 31%.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.21 billion shares. On the Nasdaq, advancers edged decliners by a narrow margin on volume of 2.07 billion shares.
Other markets: In the bond market, Treasury prices tumbled, raising the yield on the benchmark 10-year note to 3.93% from 3.90% late Tuesday.
In currency trading, the dollar was little changed versus the euro and slipped versus the yen.
COMEX gold for October delivery rose $16.80 to $825 an ounce. 
