U.S. stocks fell, setting back a fourth-quarter rally, after a rise in oil prices above $60 a barrel revived concern that higher energy costs will curtail holiday spending.
The Standard & Poor's 500-stock index declined 2.99, or 0.2 percent, to 1262.09. The Dow Jones industrial average lost 42.50, or 0.4 percent, to 10,835.01. A slump in shares of semiconductor companies weighed on the Nasdaq composite index, which fell 15.73, or 0.7 percent, to 2257.64.
The higher fuel prices helped send a gauge of retailers in the S&P 500 down 0.9 percent. Transportation companies tumbled 1.6 percent for the second-steepest drop among two dozen groups in the S&P 500. A measure of semiconductor companies in the S&P 500 slid 2 percent.
Stocks extended their fall after an economic report signaling growth at service industries reinforced speculation that the Federal Reserve will keep raising interest rates. The Institute for Supply Management's measure of financial services, retailing, building and non-manufacturing businesses was 58.5 in November. Readings above 50 signify expansion. The index was at 60 in October.
Target, the No. 2 discount retailer, fell $1.25, to $52.61. Kohl's, a low-price department-store company, declined 84 cents, to $46.12. Gap, the largest U.S. clothing chain, lost 32 cents, to $17.47.
Sears Holdings retreated $2.79, to $116.71. The biggest U.S. department-store operator offered to buy its Canadian unit for $719 million as Chairman Edward S. Lampert seeks to revive the struggling retailer.
FedEx, the No. 2 U.S. package shipping company, declined $2.03, to $95.79.
Norfolk Southern, the fourth-largest U.S. railroad, slumped 87 cents, to $43.26.
Guidant, the No. 2 maker of implantable defibrillators, surged $6.16, or 10 percent, to $67.98 for the top gain in the S&P 500. Boston Scientific offered Guidant $72 a share, half in cash and half in stock, 14 percent more than a competing bid from Johnson & Johnson. Johnson & Johnson retreated 16 cents, to $61.05. Boston Scientific fell 98 cents, to $26.35.
New York Stock Exchange composite index fell 1.61, to 7759.24.
American Stock Exchange index rose 11.89, to 1738.34.
Russell 2000 index of smaller-company stocks fell 4.00, to 686.57.
NYSE: 2.36 billion shares, up from 2.18 billion on Friday. Decliners outnumbered advancers 3 to 2.
Nasdaq: 1.69 billion shares, down from 1.79 billion. Decliners outnumbered advancers 5 to 3.
Crude oil for January delivery: $59.91, up 59 cents.
Gold for current delivery: $508.90 a troy ounce, up from $503.30 on Friday.