Stocks dropped yesterday, with all three benchmark indexes falling for the first time in almost two weeks, on evidence that higher energy costs are hurting profits at companies such as Procter & Gamble and Clorox.

Comments by Federal Reserve Bank of Dallas President Richard W. Fisher, who said inflation is near the upper limit of a tolerable range, contributed to the slide by heightening concern that the central bank will keep raising interest rates.

Fisher's speech "was quickly translated as the Fed is just going to keep raising rates and we have inflation heading into the holidays that could impact consumer spending," said Larry Peruzzi, senior equity trader at Boston Co. Asset Management.

The Standard & Poor's 500-stock index fell 12.23, or 1 percent, to 1214.47, for its steepest loss since Aug. 16. The Dow Jones industrial average dropped 94.37, or 0.9 percent, to 10,441.11. The Nasdaq composite index declined 16.07, or 0.7 percent, to 2139.36. The three benchmarks hadn't dropped on the same day since Sept. 21.

Stocks retreated in the afternoon after Fisher spoke about inflation, and extended their declines in the last 90 minutes of trading.


Procter & Gamble, the largest U.S. household goods maker, fell $1.23, to $58.08. Higher prices for raw materials may limit the company's ability to exceed earnings estimates, Citigroup Investment Research analyst Wendy Nicholson wrote in a note.

Clorox dropped 77 cents, to $53.81. The biggest U.S. maker of household bleach cut its forecast for fiscal 2006 and said it will raise prices on almost half its products because of higher energy costs.

Exxon Mobil fell $1.94, or 3.1 percent, to $60.55, for the worst performance in the Dow average. Energy shares as a group slumped 3.4 percent as crude oil prices fell. Chevron declined $1.61, to $62.84.

Mylan Laboratories gained $1.02, to $20.40. The drugmaker won regulatory approval from the Food and Drug Administration for a generic version of Pfizer's blood-pressure pill Norvasc.

Pfizer, the world's biggest drugmaker, slipped 5 cents, to $25.24.


New York Stock Exchange composite index fell 68.13, to 7558.10.

American Stock Exchange index fell 17.11, to 1721.65.

Russell 2000 index of smaller-company stocks fell 6.71, to 663.84.


NYSE: 2.37 billion shares, up from 2.09 billion on Monday. Decliners outnumbered advancers 2 to 1.

Nasdaq: 2.03 billion shares, up from 1.87 billion. Decliners outnumbered advancers

3 to 2.


Crude oil for November delivery: $63.90, down $1.57.

* Gold for current delivery: $466.10 a troy ounce, unchanged from Monday.