Investors fretted after the Commerce Department revised the nation's fourth-quarter GDP, which was raised to an annual growth rate of 1.7 percent from an earlier 1.6 percent estimate. The slowdown in growth — GDP grew at 4.1 percent in the third quarter — was blamed on an unexpected drop in government spending and business investment.

But while the final GDP reading matched economists' expectations, the department's chain deflator — an inflation measure — rose 3.5 percent, above forecasts for 3.3 percent growth. Investors have been watchful for any hint of inflation amid signs that the Federal Reserve will keep hiking interest rates to control price increases.

"I think you're seeing the market raising its estimates on economic growth, but that also may mean higher rates," said Brian Gendreau, investment strategist for ING Investment Management. "So we're still digesting what all this means, and the result so far is a flat-to-lower market."

According to preliminary calculations, the Dow Jones industrial average fell 65.00, or 0.58 percent, to 11,150.70, after opening the session in positive territory.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index lost 2.64, or 0.2 percent, to 1,300.25, while the Nasdaq composite index rose 3.04, or 0.13 percent, to 2,340.82.

Bonds continued falling amid concerns that rising yields will draw away interest in stocks, with the yield on the 10-year Treasury note jumping to 4.86 percent from 4.80 percent late yesterday. The dollar was mostly lower against other major currencies, and gold prices rebounded.

Crude futures pushed past $67 per barrel and reached a two-month high as investors worried about political tension over Iran's nuclear arms program and a fourth straight weekly drop in U.S. gasoline reserves. A barrel of light crude settled at $67.15, up 70 cents, on the New York Mercantile Exchange.

Fears of higher interest rates were exacerbated as the Labor Department reported that weekly claims for unemployment benefits fell by 10,000 to 302,000 last week, and said the results still indicate a tight labor market. More employment means more people spending, which could increase demand and spark inflation.

Yet despite high oil prices and overarching concerns about inflation, the lack of massive selloffs after the Fed's rate hike shows the stock market remains bullish, according to Brian Belski, senior equity wealth management strategist at Merrill Lynch.

"Yes, the market is taking somewhat of a rest, but there's evidence that the believability factor is increasing," Belski said. "Overall, investors are starting to believe the market can and will remain in good standing coming off of one of the best quarters we've seen in a while."

In corporate news, Best Buy Co. Inc. posted a 13 percent jump in fourth-quarter earnings as its sales gained 16 percent, helped by improved demand for bigger-ticket products like flat-panel televisions and MP3 players. The company also pegged its 2007 results mostly in line with analysts' estimates. Best Buy added 26 cents to $54.78.

Nokia raised its projected annual growth for overall worldwide mobile device sales to 15 percent from a prior target of 10 percent, saying much of the increase will come from emerging markets of Asia and Africa. The company did not forecast its own growth. Nokia rose $1.06 to $21.28.

The Nasdaq Stock Market Inc. fell $1.74, or 4.2 percent, to $40.11 after abruptly dropping its $4.2 billion offer for London Stock Exchange PLC, but the firm said it reserved the right to make another bid if a rival suitor emerges. NYSE Group Inc., which is seen as a potential bidder for LSE, dropped $1.50 to $78.50.

Web search firm Google Inc. late yesterday said it plans to sell another 5.3 million shares just two days before its stock is added to the benchmark S&P 500 index. With the additional equity, investors fear Google will have to substantially boost earnings to match Wall Street targets. Google fell $6.54 to $388.44.

Declining issues led advancers by more than 9 to 7 on the New York Stock Exchange, where volume of 1.62 billion shares topped the 1.58 billion shares that changed hands yesterday.

The Russell 2000 index of smaller companies fell 1.58, or 0.21 percent, to 762.59.

Overseas, Japan's Nikkei stock average gained 0.63 percent, and closed above 17,000 for the first time since Aug. 29, 2000. Britain's FTSE 100 rose 0.94 percent, Germany's DAX index added 1.17 percent and France's CAC-40 was higher by 1.16 percent.