Stocks dropped to six-week lows yesterday, erasing the Standard & Poor's 500-stock index's gain for the year, as crude oil prices rose above $67 a barrel to a new high.

Oil's advance wiped out a rally sparked by an unexpected increase in sales of new homes. Caterpillar and United Technologies fell after the government reported the biggest decline in durable-goods orders in 18 months.

"It's not oil at new records by itself anymore, it's oil with economic numbers substantiating the impact that oil's having on the economy," said John Twomey, head of trading at Merriman Curhan Ford. "That's creating some nervousness" in the market.

The S&P 500 fell 8.00, or 0.7 percent, to 1209.59. The Dow Jones industrial average dropped 84.71, or 0.8 percent, to 10,434.87. The Nasdaq composite index retreated 8.34, or 0.4 percent, to 2128.91.

Movers

Caterpillar, the world's biggest maker of earth-moving equipment, fell $1.48, or 2.7 percent, to $53.21, for the worst performance in the Dow average.

United Technologies, the maker of Pratt & Whitney jet-engine parts and Otis elevators, retreated 79 cents, to $50.74.

Toll Brothers, the largest U.S. builder of luxury homes, rose $2.07, to $50, as an index of home builders gained 1.4 percent, the first increase in seven days. Pulte Homes gained $1.36, to $84.84, and Lennar rose $1.17, to $60.10.

Applebee's International slid $1.68, to $22.37, after the restaurant chain trimmed its earnings forecast for the year. Other casual-dining chains also fell. Darden Restaurants, operator of the Red Lobster chain, dropped $1.50, or 4.6 percent, to $30.92, for the worst performance in the S&P 500. Ruby Tuesday slid $1.29, to $22.57.

General Motors gained 75 cents, or 2.2 percent, to $34.27, for the biggest gain in the Dow average.

Coach, the No. 1 U.S. seller of luxury-leather goods, rallied $1.35, to $33.99. The company boosted its first-quarter profit forecast by a penny, to 25 cents a share, and extended the contracts of its top three executives.

Indexes

New York Stock Exchange composite index fell 36.36, to 7417.42.

American Stock Exchange index rose 7.61, to 1618.68.

Russell 2000 index of smaller-company stocks fell 0.46, to 655.01.

Volume

NYSE: 1.95 billion shares, up from 1.69 billion on Tuesday. Decliners outnumbered advancers 5 to 4.

Nasdaq: 1.74 billion shares, up from 1.37 billion. Decliners outnumbered advancers 6 to 5.

Commodities

Crude oil for October delivery: $67.32, up $1.61.

Gold for current delivery: $437.30 a troy ounce, down from $439.40 on Tuesday.