Crude oil futures extended their gains, surpassing $48 per barrel, as investors worried about declining U.S. reserves, the Iraqi elections and evidence of OPEC production cuts. A barrel of light crude was quoted at $48.10, up $1.73, on the New York Mercantile Exchange.

Wall Street also worried about the latest first-time jobless claims report, which showed a jump of 10,000 claims to 367,000 last week, a three-month high. After Friday's modest job creation report, the labor market remained a concern for investors.

Those two factors, combined with continued investor unease about stock prices after the postelection rally, have overshadowed strong earnings reports this week from tech heavyweights Intel Corp. and Apple.

"These (earnings) numbers are unambiguously good, and you're seeing a nice runup in those stocks, but they aren't spilling over into the rest of the sector," said Russ Koesterich, U.S. equity strategist at State Street Corp. in Boston.

In midafternoon trading, the Dow Jones industrial average fell 29.93, or 0.3 percent, to 10,587.85.

Broader stock indicators were narrowly lower. The Standard & Poor's 500 index was down 1.16, or 0.1 percent, at 1,186.54, and the Nasdaq composite index lost 0.81, or 0.04 percent, to 2,091.72.

Analysts said investor nervousness has pressured stocks, but strong economic reports and more positive earnings statements could shake the market out of its malaise.

"It's a pretty sluggish trade right now, and it'll take something big to get us out of it either way," said Neil Massa, an equity trader at John Hancock Funds. "It seems like we're due for some sort of relief rally after all this selling, but that'll depend on the economic numbers and some positive outlooks for 2005 (from companies)."

The Commerce Department's December report on retail sales failed to impress investors. Sales rose 1.2 percent for the month, better than the 1.1 percent hike economists had forecast. However, taking auto sales out of the equation, retail sales rose just 0.3 percent, less than the 0.4 percent Wall Street expected.

But there was upbeat news from Apple, which had an impressive fourth quarter, beating Wall Street profit forecasts by 21 cents per share. The company credited strong sales of its popular iPod music player for quadrupling its profits from a year ago. Apple climbed $5.96, or 9.1 percent, to $71.842.