U.S. Stocks Shift Gears Lower As Oil Tops $129 A Barrel

NEW YORK (MarketWatch) -- U.S. stocks on Wednesday shed opening gains in concert with a swing higher in crude-oil prices, with futures topping $129 a barrel, and as another bout of bad news slammed financials shares.

The Dow Jones Industrial Average fell 4.72 points to 12,543.63, with 15 of its 30 components falling, with financial shares leading the blue-chip declines.

American International Group Inc. fell 4.5%, while JPMorgan Chase declined 1.1%.

Dow gains were led by AT&T Inc. , up 1.2%.

The S&P 500 fell 3.06 point to 1,382.29, with five of its 10 industry groups falling, the declines fronted by financials, off 1.6%, with shares of Bear Stearns Cos. among the laggards, off 1.5%.

The Wall Street Journal reported securities regulators probing the collapse of Bear Stearns are looking for any signs of market manipulation. .

Shares of KeyCorp were also under pressure, down 10%, after the regional bank hiked its 2008 outlook for loan losses. .

Energy led S&P sector gains, recently ahead 0.6%.

The technology-laden Nasdaq Composite lost 7.12 points to 2,474.12.

In commodities trade, oil futures reversed course after falling to a one-week low earlier on, with light, sweet crude for July delivery gaining 40 cents to $129.25 a barrel.

Gasoline prices edged up less than a penny, but stayed at the record level of $3.94 a gallon on average in the last week, according to the Daily fuel Gauge Report from AAA.

Early rise

Earlier, the stock indexes started off extending gains into a second day, as crude fell to a one-week low and April's orders for big-ticket products showed a milder-than-expected decline.

The Commerce Department reported orders for durable goods fell 0.5%. Excluding the volatile transportation component, orders climbed 2.5%.

"While we will have to wait for the factory orders report for details, it appears the strong demand for machinery and electrical equipment were the main factors behind the surge in the core," said Lehman Brothers analyst Zach Pandle.

"The main factor weighing on the headline figure was a 24% collapse in civilian aircraft orders, reflecting a decline in bookings by Boeing during the month. We had expected an even greater decline in aircraft orders, however, and thus even this steep drop represents a modest positive surprise," said Pandle.

Shares of Boeing Co. were edging lower, off 0.7%.

In Europe, an earlier pullback in oil prices helped market sentiment, with the pan-European Dow Jones Stoxx 600 index climbing 1.2% to 320.86. .

By Kate Gibson