"The answer is probably no. And will rising energy prices take purchasing power out of consumers' pockets? The answer is probably yes."

The Dow lost 41.24, or 0.4 percent, to 10,362.70, paring the first quarter's 3.8 percent gain. The Standard & Poor's 500 Index fell 0.84 to 1146.55. With European markets closed, it was the slowest trading day on the New York Stock Exchange this year.

The Nasdaq Composite Index rose for the fourth day, adding 17.27, or 0.9 percent, to 1862.62. It erased a loss of as much as 1.4 percent as Intel Corp. and Qualcomm Inc. advanced.

Wal-Mart, which claimed the top spot on the annual Fortune 500 list of the largest publicly held U.S. companies in terms of revenue, fell to its lowest level in five weeks. Merrill Lynch, the world's biggest brokerage, said earnings growth by consumer- related companies will lag the rebound in other industries.

"We are close to the point in time when the recovery in total corporate profits should exceed the recovery in retailing profits, causing a rotation of investment funds from retailing to manufacturing stocks," Merrill analysts wrote in a report.

The firm cut its recommendation for retail stocks to "average weight" from "overweight."

Wal-Mart fell $1.74 to $59.56. Merrill's Robert Ford lowered the stock to near-term "buy" from "strong buy." The company, along with Federated Department Stores Inc., said sales at stores open more than a year were less than expected last week. Federated lost $1.54 to $39.31.

Merrill reduced its recommendation on 11 merchants, including Toys "R" Us, which dropped 59 cents to $17.37 and Barnes & Noble Inc., which slipped 94 cents to $30.05.

The S&P 500 Consumer Discretionary Index, which includes Wal- Mart and Home Depot Inc., gained 30 percent from its Sept. 21 low. The S&P 500 has advanced 18 percent during the period.

The Dow slid after a report by the Institute for Supply Management showed prices paid by manufacturers rose more than expected in March, triggering speculation accelerating inflation may prompt the Federal Reserve to raise interest rates.

About seven stocks fell for every six that rose on the NYSE and decliners outnumbers advancers by five-to-four on the Nasdaq Stock Market. Some 1.05 billion shares traded on the Big Board, the lowest since Dec. 31.

Telecommunications-equipment stocks rallied after Banc of America Securities analyst Christopher Crespi said the worst is over for the industry. Capital spending will return to "modest sequential improvement" this year, he said in a note to clients.

The analyst raised Cisco, Ciena Corp. and Juniper Networks Inc. to "strong buy" from "buy."

Cisco, the biggest maker of equipment to direct Internet traffic, advanced 59 cents to $17.52 and smaller rival Juniper climbed 41 cents to $13.03. Ciena, the second-largest U.S. maker of fiber-optic equipment, gained 37 cents to $9.37.

Qualcomm added $1.70 to $39.34 and Intel, the top semiconductor maker gained 76 cents to $31.17.

Oil stocks rose as the price of crude surged to a six-month high on concern tensions between Israel and Palestinians will delay shipments from the Middle East. U.S. shares of Royal Dutch Petroleum Co. gained 77 cents to $55.09 and El Paso Corp. advanced $1.13 to $45.16.