Stocks slumped Tuesday as oil prices inched back up from earlier lows and an investigation of the insurance industry pressured managed-care companies, trumping better-than-expected earnings from International Business Machines and Texas Instruments.
Shares of managed-care providers tumbled on reports that an ongoing investigation by New York Attorney General Eliot L. Spitzer extended to health insurers.
Volatile oil prices also prompted investors to sell; although crude retreated for a second session, the market was unnerved by its slow creep back above $53 per barrel.
"Between Spitzer and oil prices, it's taking away from some of the party that we saw earlier with IBM and Texas Instruments, which has helped the Nasdaq hold it together today," said Steven Goldman, chief market strategist for Weeden & Co. in Greenwich, Conn.
The Dow Jones industrial average fell 58.70, or 0.6 percent, to 9897.62. The Standard & Poor's 500-stock index dropped 10.79, or 1.0 percent, to 1103.23. The Nasdaq composite index fell 13.62, or 0.7 percent, to 1922.90, despite strength among chip stocks on earnings news.
In economic news, the Labor Department reported a modest 0.2 percent rise in September for its consumer price index as lower prices for new cars and airfares helped temper a rise in energy and medical care costs.
Separately, housing construction fell by 6 percent in September to a seasonally adjusted annual rate of 1.898 million units, the Commerce Department said.
The decline, steeper than expected, followed a 1.8 percent rise in housing activity in August, which turned out to be stronger than initially estimated. Home builders posted declines on the news.
Among stocks being pressured by the insurance investigation, Aetna slid $11.57, or 11.8 percent, to $86.17; Cigna shed $6.85, or 10.3 percent, to $59.73; and UnitedHealth Group dropped $6.85, or 9.3 percent, to $66.50.
Among advancers, IBM rose $3.45, or 4 percent, to $89.37, on better-than-expected third-quarter results. IBM reported a small gain in third-quarter profit and its earnings beat estimates by 3 cents a share.
Also giving hope to tech investors, Texas Instruments advanced $1.46, or 6.9 percent, to $22.55, on solid third-quarter profit attributed to rising demand for its products in high-end mobile phones and digital light processing systems for big-screen televisions.
* The New York Stock Exchange composite index fell 41.98, to 6530.39; the American Stock Exchange index rose 5.17, to 1286.55; and the Russell 2000 index of smaller-company stocks fell 5.36, to 566.67.
* Declining issues outnumbered advancing ones by 9 to 5 on the NYSE, where trading volume rose to 1.74 billion shares, from 1.37 billion on Monday. On the Nasdaq Stock Market, decliners outnumbered advancers by 11 to 7 and volume totaled 1.7 billion, up from 1.49 billion.
* The price of the Treasury's 10-year note rose $1.25 per $1,000 invested, and its yield fell to 4.03 percent, from 4.05 percent on Monday.
* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 108.41 yen, down from 109.27 late Monday, and a euro bought $1.2518, up from $1.2501.
* Light, sweet crude oil for November delivery settled at $53.29, down 38 cents, on the New York Mercantile Exchange.
* Gold for current delivery rose to $420.30 a troy ounce, from $416.20 on Monday, on the New York Mercantile Exchange's Commodity Exchange.