Profit worry, higher oil weigh on Wall St

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks slipped on Wednesday as United Parcel Service Inc's forecast for earnings shortfall and a surge in oil prices dampened the outlook for corporate results.

The Nasdaq was down 1 percent.

Stocks extended declines before midday as oil prices advanced and shares of Morgan Stanley helped drag down financials. The investment bank said that more of its assets became illiquid or hard to value during the first quarter.

The lowered profit forecast from UPS fueled fears that fallout from the U.S. housing slump has hurt other parts of the economy. General Electric Co, a large manufacturer and a Dow component, also declined.

"UPS had an earnings warnings and that could portend more lowering of earnings guidance," said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois. "Companies are making comments about what the rest of the year is going to look like, and that's what the market is going to be focusing on in the short term."

U.S. crude oil futures rose to near-record levels as government data showed a surprising draw on crude stockpiles last week. An index of retail shares slid 2.6 percent, with high energy costs likely to hit consumer spending.

The Dow Jones industrial average fell 69.86 points, or 0.56 percent, to 12,506.58. The Standard & Poor's 500 Index was down 9.29 points, or 0.68 percent, at 1,356.25. The Nasdaq Composite Index was down 23.78 points, or 1.01 percent, at 2,324.98.

Oil was last up $2.55 at $111.05 a barrel.