Investors' worries about consumer spending intensified after Apple's lower-than-expected third-quarter revenues. The market got more troubling news from Prudential's downgrade of Intel, which said the company could face disappointing revenues and margins for as long as the next year.

The company news hit an already bruised market, as it followed nasty declines on Wall Street last week. Investors are anxious about Federal Reserve interest rate hikes and high energy costs, issues that could hang over the market for months.

"There's been nothing to trigger the kind of selloff we've seen yesterday and today," said Brian Bush, director of equity research, Stephens Inc. "I don't see a logical explanation, other than just pure nervous speculation and fear."

Stocks had opened higher after Federal Reserve Chairman Alan Greenspan said in a speech that the economy was weathering the recent jump in energy prices without major disruptions.

The Dow Jones industrial average fell 36.26, or 0.35 percent, to 10,216.91.

Broader stock indicators were also lower. The Standard & Poor's 500 index fell 7.19, or 0.61 percent, to 1,177.68, while the technology-focused Nasdaq composite index fell 23.62, or 1.15 percent, to 2,037.47.

Bonds fell for a second session, with the yield on the 10-year Treasury note rising to 4.45 percent from 4.39 percent late yesterday. The dollar was up against other major currencies and gold prices fell after hitting an 18-year high in morning trading.

Climbing oil prices exacerbated worries about energy costs. A barrel of light crude quoted climbed 59 cents to settle at $64.12 on the New York Mercantile Exchange.

"A lot of people who were hoping that when it broke $62 a barrel, it would go back to the $50s are seeing that's not happening," said Hank Herrmann, CEO, Waddell & Reed Inc.

Some investors held off on making large bets until at least Friday, when the consumer price index, a key barometer of inflation, is released by the Labor Department.

While Apple beat Wall Street profit forecasts by a penny per share, but revenues came in below forecasts and iPod sales missed expectations by a wide margin. Investors worried the company's holiday sales might also disappoint. Apple tumbled $2.34 to $49.25.

Intel fell 18 cents to $23.24 after analysts at Prudential downgraded the chip maker's stock to "underweight" from "neutral weight," citing potential weakness in revenues and profit margins. Rival chip maker Advanced Micro Devices fell $2.29 to $21 despite a 73 percent jump in third-quarter earnings that beat profit forecasts by 10 cents per share.

In other earnings news, motorcycle manufacturer Harley-Davidson Inc. said strong worldwide shipments led to a 16 percent rise in profits that beat Wall Street estimates by 6 cents per share. Harley-Davidson rose $1.30 to $46.90.

Dow component Pfizer Inc. rose 54 cents to $24.84 after a British judge ruled to protect the company's patent on the cholesterol drug Lipitor, which had been challenged by a generic drug maker.

Commodities brokerage Refco Inc. continued the free-fall that started Monday, when the company said its earnings going back to 2002 should no longer be relied upon because former CEO Philip Bennett had, though a series of transactions, taken $430 million in bad debt off the company's books. The CEO repaid the company in cash on Monday, but was charged with securities fraud today. The stock fell $3 to $10.85, down from Friday's close of $28.20.

Declining issues outnumbered advancers by more than 4 to 1 on the New York Stock Exchange, where volume came to 1.91 billion shares, compared with 1.73 billion at the same point yesterday.

The Russell 2000 index of smaller companies fell 8.51, or 1.35 percent, to 621.57.

Overseas, Japan's Nikkei stock average fell 0.69 percent. Britain's FTSE 100 fell 0.72 percent, Germany's DAX index dropped 1.01 percent, and France's CAC-40 lost 0.76 percent.