NEW YORK (AP) -- Wall Street extended its losses Wednesday as a rise in oil prices and a profit warning from United Parcel Service Inc. raised investors' anxiety about the well-being of the economy.
Technology names were among the steepest decliners, with the tech-dominated Nasdaq composite index falling more than 1 percent.
The surge in oil prices weighed on transportation stocks and contributed to a pessimistic tone in the market. Crude prices jumped following a government report showing U.S. inventories fell by more than expected last week. The rise hurt shares of airline and trucking companies, which have already struggled with high fuel costs.
UPS, the world's largest shipping carrier, pointed to a weaker economy and higher fuel costs in trimming its forecast. Investors earlier this week received reports from aluminum producer Alcoa Inc. and chip maker Advanced Micro Devices Inc. that have made the market uneasy about overall first-quarter results.
Joe Kinahan, chief derivatives strategist for the brokerage service Thinkorswim Group Inc., said investors are nervous about the implications, including inflation, of higher oil prices. Still, he said the relative calmness seen in the markets in recent sessions is impressive even as investors remain cautious about the economy.
"It's the first week we have had in a while where stocks are trading on their own merit. That's why we're trading on oil," he said. "It's amazing how well the market has held in there with three days of not good news."
According to preliminary calculations, the Dow fell 49.18, or 0.39 percent, to 12,527.26.
Broader stock indicators also declined. The Standard & Poor's 500 index fell 11.05, or 0.81 percent, to 1,354.49, and the Nasdaq declined 26.64, or 1.13 percent, to 2,322.12.
The Russell 2000 index of smaller companies fell 13.54, or 1.90 percent, to 698.38.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.22 billion shares compared with 1.2 billion shares traded Tuesday.
Bond prices jumped as stocks declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.47 percent from 3.56 percent late Wednesday.
Light, sweet crude jumped $2.37 to settle at a record $110.87 a barrel on the New York Mercantile Exchange after earlier rising as high as $112.21. The previous record, set last month, was $111.80.
The rise in oil hurt transportation stocks. Three relatively small air carriers have filed for bankruptcy in as many weeks - in part because of high fuel prices. Among airlines, Continental Airlines Inc. fell $1.66, or 7.6 percent, to $20.24, while trucking company J.B. Hunt Transport Service Inc. fell $1.92, or 6 percent, to $29.85.
Gold prices rose, while the dollar was mixed against other major currencies.
Bill Schultz, chief investment officer at McQueen, Ball & Associates in Bethlehem, Pa., said some investors have grown uneasy that profit warnings from companies like UPS could signal the economy is facing a tougher climb than some investors had assumed and that further disclosures could derail hopes for an economic recovery in the second half of the year.
"We know the first quarter is not going to be good. UPS is sort of indicating that maybe things are continuing to be not so positive out there," he said. "People are looking for clues more, I think, for the second half this year."
Despite the market's declines on Tuesday and Wednesday, investors don't appear fearful, Kinahan said.
He noted that the Chicago Board Options Exchange's volatility index, known as the VIX, and often referred to as the "fear index," remained below the important 25 level. It rose 0.47, or 2.1 percent, to 22.83. Kinahan contends readings in this range suggest investors are being careful but aren't succumbing to fear.
"Thirty is really the level where people are really, really frightened," he said. "We might be a little bit cautious here as to what's going to happen."
Kinahan added that technology shares were showing steeper declines Wednesday as investors seemed uncertain about what the next catalyst might be to drive the sector. He noted that while Apple Inc. has been a strong performer, tovestors seem to be wanting more reason to buy into the sector. Apple fell $1.40 to $151.44.
In corporate news, UPS' earnings forecast weighed on the company's stock. UPS warned at an investor conference last month that it might miss its earnings target if weakness seen in February didn't ease. UPS fell $2.74, or 3.7 percent, to $70.57.
AMR Corp. fell $1.15, or 11 percent, to $9.17 after its American Airlines canceled more than 1,000 flights as it inspects the wiring on some of its aircraft. The move comes a day after American canceled 460 flights after federal inspectors found problems in work done two weeks ago on wiring.
Boeing Co. delayed its 787 jetliner by another six months, pushing the aircraft's debut for commercial service to the third quarter next year. Still, some analysts had expected a greater delay. The stock, one of the 30 that comprise the Dow industrials, rose $3.58, or 4.8 percent, to $78.60 and helped contain the blue chips' losses.
Overseas, Japan's Nikkei stock average fell 1.05 percent. Britain's FTSE 100 closed down 0.11 percent, Germany's DAX index declined 0.75 percent, and France's CAC-40 fell 0.77 percent.