Investors grew cautious as crude oil futures rose for the second straight day, pushing past the $42-per-barrel mark. The market fretted about whether a small build in U.S. heating oil stocks was enough to last the winter, and pondered signals that OPEC may decide to cut production at a meeting this week.

A barrel of light crude for January delivery was quoted at $42.70, up 76 cents, on the New York Mercantile Exchange.

"There isn't any conviction out there right now on the part of investors," said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. "They don't have the conviction that profits have staying power into 2005. They don't have much conviction that the economy's going to grow at a decent clip. There's a lot of undue pessimism out there."

At midday, the Dow Jones industrial average fell 52.47, or 0.5 percent, to 10,441.76.

Broader stock indicators fell substantially. The Standard & Poor's 500 index was down 6.59, or 0.6 percent, at 1,176.22, while the Nasdaq composite index lost 22.24, or 1 percent, to 2,103.87.

The technology-heavy Nasdaq was pressured after Xilinx Inc. and Altera Corp., the two biggest makers of programmable microchips, reported a larger drop in sales than was previously expected. Xilinx fell $2.23 to $28.50, while Altera tumbled $2.64 to $19.56. Intel Corp. lost 40 cents to $22.61 and rival Advanced Micro Devices Inc. was down 96 cents at $21.94.

Telecommunications equipment maker Ciena Corp. was a bright spot for tech stocks. The company increased its sales forecast for the current quarter by 20 percent, and posted a lower-than-expected loss for the past quarter. Ciena climbed 53 cents, or 22.69 percent, to $2.87.

Luxury home builder Toll Brothers Inc. surged $4.80 to $58.91 after profits soared 93 percent in the quarter and the company surpassed earnings forecasts by 25 cents per share.

Dow component McDonald's Corp. gained 2 cents to $31.52. It reported sales at stores open at least a year rose 4.2 percent in November, with U.S. stores making the most gains. Sales gains were less than previous months, however.

DreamWorks Animation SKG Inc., in its first quarterly earnings report since going public, beat Wall Street profit forecasts by a penny per share, but disappointed Wall Street by pushing back the release of "Shrek 3" by six months, to May 2007. DreamWorks Animation dropped $2.22 to $37.98.