General Electric, a widely held Dow Jones industrial closely watched on Wall Street, said it was on track for another strong quarter and increased its stock buyback program. Encouraging sales at Wal-Mart Stores Inc. and other retailers also helped the market post early gains.

But the market, which had started the day higher, retreated after Dallas Fed President Richard Fisher reiterated his belief that inflation was rising near the high end of the Fed's comfort zone. Some investors also awaited the government's key employment report, due tomorrow and expected to detail job losses from the Gulf Coast hurricanes.

Those long-term challenges prompted investors to abandon some of the market's more popular holdings, pushing stocks lower through the session. A continued dropoff in oil prices caused a selloff in the high-flying energy sector, and small-cap and technology stocks also suffered as investors moved into larger, more established companies.

"This is certainly not bad, with retail sales OK and oil falling, but there's still a lot of uncertainty out there," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "You've still got an erosion in consumer confidence that could lead to a serious erosion in consumer spending, at the same time you have the (Federal Reserve) still hiking interest rates. It's a hard market to buy into."

The Dow fell 30.26, or 0.29 percent, to 10,287.10, adding to a loss of 218.12 over the previous two sessions.

Broader stock indicators also fell. The tech-focused Nasdaq composite index dropped 18.94, or 0.9 percent, to 2,084.08, and the Standard & Poor's 500 index lost 4.90, or 0.41 percent, to 1,191.49.

Bonds lost ground alongside stocks, with the yield on the 10-year Treasury note rising to 4.39 percent from 4.36 percent late yesterday. The dollar weakened against other major currencies, while gold prices rose.

Another sharp drop in crude prices helped buoy stocks earlier in the session, with a barrel of light crude quoted at $61.36, down $1.43, on the New York Mercantile Exchange. However, with first-time jobless claims rising to 390,000 last week, an increase of 21,000 from the previous week, investors were increasingly nervous about employment in the wake of Hurricanes Katrina and Rita.

The storms' employment impact will be further illuminated tomorrow after the Labor Department releases its monthly jobs report. Economist expect a net loss of 172,000 jobs in September, with the hurricanes' disruptions offset by new jobs created in other places.

General Electric, seen as a barometer of the overall economy due to its media, industrial and healthcare businesses, pleased investors with its steady profit outlook. The company also added $1 billion to its stock buyback program. GE gained 91 cents to $33.59.

"We need more companies to come out and tell us that they're going to be OK," said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia. "That will help dispel this kind of fog we're in right now, because I think despite the warnings we've had from some of these companies, we'll have good earnings this quarter."

Wall Street was also heartened by retail sales reports, which mostly showed modest gains despite the economic disruptions along the Gulf Coast. Wal-Mart rose 43 cents to $43.93 after the retailer said its sales for stores open at least a year rose 3.8 percent, in line with analysts' expectations.

Rival discounter Target Corp. topped Wall Street's expectations with a 5.6 percent jump in September same-store sales, while department store chain J.C. Penney said its sales climbed 1.4 percent for the month and increased its earnings forecast for the quarter. Target added 78 cents to $52.02, while J.C. Penney dropped 38 cents to $44.59, giving up earlier gains.

Discount retailer Costco Wholesale Corp. climbed $2.01 to $44.92 after posting a 20 percent rise in profits that beat Wall Street's expectations by 2 cents per share. The company also said its same-store sales rose 7 percent in September compared to a year ago.

In the energy sector, Exxon Mobil Corp. lost fell 38 cents to $58.57, Chevron Corp. slid $2.04 to $60 and Valero Energy Corp. fell $2.97 to $102.80, all on heavy volume.

In other news, Merck & Co. fell 6 cents to $26.83 after having remained in positive territory much of the session. The company announced its experimental cervical cancer treatment, Gardasil, was 100 percent effective in short-term prevention of the disease.

Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.81 billion shares, compared with 2.52 billion traded yesterday.

The Russell 2000 index of smaller companies fell 5.53, or 0.86 percent, to 639.45.

Overseas, Japan's Nikkei stock average tumbled 2.41 percent. In Europe, Britain's FTSE 100 closed down 1.02 percent, France's CAC-40 dropped 1.25 percent for the session, and Germany's DAX index lost 1.03 percent in late trading.