US stocks fell on Tuesday for a third day as investors worried that a sharp rebound in oil and other commodity prices would lead to higher inflation and hurt consumer and corporate spending.
The Nasdaq has lost about 2 percent since Thursday, its most pronounced slide in almost two months. Among leading decliners on Nasdaq were Internet stocks such as Google Inc and semiconductor shares such as Applied Materials Inc.
Oil struck a seven-month high above $69 a barrel on Tuesday as tensions escalated over Iran's nuclear work. Some analysts said crude prices could climb as high as $100 a barrel.
"A combination of factors ranging from the recent rise in oil prices to concerns over earnings and overall higher rates caused a pullback in stocks," said Peter Boockvar, equity strategist at Miller, Tabak & Co.
The Dow Jones industrial average fell 51.70 points, or 0.46 percent, to end at 11,089.63. The Standard & Poor's 500 Index slipped 10.03 points, or 0.77 percent, to 1,286.57. The Nasdaq Composite Index dropped 22.92 points, or 0.98 percent, to close at 2,310.35.
On the earnings front, Genentech Inc reported after the bell that first-quarter profit rose on strong sales of Avastin and its other cancer medicines.
But shares of Genentech, the world's second-largest biotechnology company, were down 1.1 percent at $80.82 in late after-hours trading on the Inet electronic brokerage following the earnings report. An analyst said the company reported disappointing sales of Rituxan, Genentech's drug for non-Hodgkin's lymphoma, which was recently approved to treat rheumatoid arthritis.
Initially, Genentech's shares fell to $79.88 on Inet, down 2.2 percent from their close at $81.70 on the New York Stock Exchange. During regular trading, the stock gained $1.07.
US crude for May delivery hit a NYMEX session high at $69.25. The May crude oil futures contract settled on Tuesday at $68.98 a barrel, up 24 cents on the New York Mercantile Exchange.
Former Iranian President Akbar Hashemi Rafsanjani said on Tuesday that Iran is producing enriched uranium, which the United States and other nations fear will be used to make nuclear weapons.
Shares of American International Group Inc, the world's largest insurer by market capitalisation, fell 1.3 percent, or 80 cents, to $63.45, reflecting concerns about rising rates.
Investors see the federal funds rate going up to at least 5 percent from the current 4.75 percent. Higher interest rates could hurt profits as the economy slows, some traders argue.
Bausch & Lomb Inc's stock sank 14.6 percent, or $8.41, to $49.03 - its biggest drop in more than 5 1/2 years - a day after the company said it would stop shipping a type of contact lens solution. Some of the solution's users were diagnosed with serious eye infections.
Google's shares fell 1.6 percent, or $6.72, to $409.66 on Nasdaq. Applied Materials Inc stock was down 1 percent, or 18 cents, at $17.51 on Nasdaq. On Monday, analysts at Banc of America Securities cut their price target on Applied Materials stock, while analysts at UBS cut their rating on the stock to "neutral" from "buy." The market's jitters overshadowed a stronger-than-expected quarterly profit reported after Monday's closing bell by Alcoa Inc, the world's largest aluminium producer.
Alcoa, up 3.8 percent, or $1.26, at $34.09 on the NYSE, was the Dow's biggest gainer and helped limit its decline. Of the 30 Dow industrials, only seven finished the session higher.
Positive comments from Citigroup lifted the shares of another Dow component, heavy equipment maker Caterpillar Inc - up 1.6 percent, or $1.21, at $76.66.
Shares in Nasdaq Stock Market Inc fell 1.3 percent, or 52 cents, to $40.85 after earlier climbing 5 percent. The Nasdaq Stock Market Inc said on Tuesday it has acquired a near 15 percent stake in the London Stock Exchange for about $780 million.
Trading was fairly active on the NYSE, with 1.58 billion shares exchanged, slightly below last year's average of 1.61 billion. On Nasdaq, about 2.18 billion shares traded, above last year's daily average of 1.80 billion.
On both the NYSE and the Nasdaq, decliners outpaced advancers by a ratio of almost 3 to 1.