REFILE-US STOCKS-Market falls on oil surge, profit worries

(Refiles to fix typo to read 'Shares of AirTran' in paragraph 10))

By Cal Mankowski

NEW YORK, April 22 (Reuters) - U.S. stocks fell on Tuesday as surging oil prices escalated concerns about how higher energy costs will affect the economy, profits and consumer spending, while disappointing earnings outlooks also darkened the mood.

All three major U.S. stock indexes dropped more than 1 percent, while an index of airline stocks .XAL plunged 11.6 percent and an index of retailers' shares .RLX slid 2.6 percent as crude oil futures rose $2 to a record above $119 per barrel.

Microchip maker Texas Instruments Inc (TXN.N: Quote, Profile, Research) said its second quarter would be weaker than expected due to an uncertain economic situation and cited customer caution and weak demand for high-end cell phones. Its stock fell 6.6 percent to $28.58.

UnitedHealth Group Inc (UNH.N: Quote, Profile, Research) posted a lower-than-expected first-quarter profit, hurt by weakness in its business serving employers and slashed its full-year earnings forecast. Its shares fell 10.6 percent to $33.79.

"The price of oil is the over-arching issue," said Matt Kaufler, portfolio manager and equity analyst at Clover Capital Management in Rochester, New York. "Everyone keep saying that it's overdone but the price keeps going up. The more it stays elevated, the more inflation fears becomes cemented in."

The Dow Jones industrial average .DJI was down 145.34 points, or 1.13 percent, at 12,679.68. The Standard & Poor's 500 Index .SPX was down 16.31 points, or 1.17 percent, at 1,371.86. The Nasdaq Composite Index .IXIC was down 42.19 points, or 1.75 percent, at 2,365.85.

On the Nasdaq, shares of online DVD rental company Netflix Inc (NFLX.O: Quote, Profile, Research) fell 22 percent to $30.72. The company reported quarterly profits late on Monday that met expectations but disappointed some who were hoping for more. The company's gross profit margin declined.