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Energy supply causes worries

NEW YORK - A jump in the nation's energy inventories sent stocks downward yesterday as investors worried that demand for oil and gasoline is falling because of the struggling economy.

NEW YORK - A jump in the nation's energy inventories sent stocks downward yesterday as investors worried that demand for oil and gasoline is falling because of the struggling economy.

Major stock indexes slid about 1 percent from 13-month highs, including the Dow Jones industrial average, which fell 93 points after six days of gains. The inventory report from the government pushed crude oil down 3 percent, below $77 a barrel. A gain in the dollar also weighed on prices for commodities including oil by making them more expensive for overseas buyers.

A drop in stocks of energy companies upended an early advance led by technology shares, which rose after 3Com Corp. agreed to a $2.7 billion takeover by Hewlett-Packard Co. and as Intel Corp. said it would pay $1.25 billion to Advanced Micro Devices Inc. to settle legal disputes.

But stocks could get a boost today from The Walt Disney Co., which said after the closing bell that its quarterly profit jumped 18 percent on better results at its movie studio.

Wal-Mart Stores Inc. reported third-quarter earnings that beat analysts' expectations, though sales at stores open at least a year dropped during the quarter. The mammoth company is seen as a key indicator of consumer spending trends.

The Dow fell 93.79, or 0.91 percent, to 10,197.47.

The broader S&P 500 index fell 11.27, or 1.03 percent, to 1,087.24 after two days of gains. The Nasdaq fell 17.88, or 0.83 percent, to 2,149.02.

The Russell 2000 index of smaller companies fell 12.39, or 2.09 percent, to 580.32.

Tom Nyheim, portfolio manager at Christiana Bank & Trust Co., of Greenville, Del., said the drop in oil was not likely to continue because demand would outstrip supply as economies in Asia and elsewhere recover ahead of the United States.

Nyheim said the market's drop indicated a healthy caution among traders after an eight-month advance that has pushed the S&P 500 index up 60.7 percent. Nyheim predicts that investors satisfied with their gains for the year might avoid placing big bets in November and December to safeguard their returns.

"I think we're going to consolidate, maybe flatline, toward the end of the year," he said.

The drop in oil weighed on energy stocks. Shares of Anadarko Petroleum Corp. fell $2.43, or 3.74 percent, to $62.55, while those of Range Resources Corp. fell $2.22, or 4.34 percent, to $48.98.

Among tech stocks, 3Com shares rose $1.77, or 31.11 percent, to $7.46, while H-P shares fell 30 cents, or 0.60 percent, to $49.70. Shares of Advanced Micro rose $1.16, or 21.80 percent, to $6.48, and shares of Intel fell 16 cents, or 0.81 percent, to $19.68.

Wal-Mart shares rose 27 cents, or 0.51 percent, to $53.24. Kohl's Corp. shares rose 5 cents, or 0.09 percent, to $54.64 after the department store chain's fiscal third-quarter profit rose 21 percent.