The Standard & Poor's 500 Index declined at midday as oil prices ticked higher, raising fears that the world's central banks may raise interest rates to tame inflation.
The S&P 500 lost 13.60 points, or 1 percent, to 1,344.84.
The Energy Department reported Wednesday that gasoline supplies rose last week, while crude inventories fell more than expected. The report offered little indication that the U.S. demand for energy was easing.
Oil prices surged above $136 a barrel on the news before retreating a bit to $135.31 at midday.
Shares of insurer MGIC Investment Corp. took the biggest percentage loss at midday, plunging $1.49, or 13.9 percent, to $9.23, after earlier trading at $8.75, their lowest point in nearly 16 years.
Microchip Technology Inc. fell $2.95, or 8.6 percent, to $31.23. A JPMorgan analyst downgraded the company to "Neutral" from "Overweight," predicting a slowdown in the Chinese market.
And shares of chip testing equipment maker Teradyne Inc. fell 89 cents, or 7.4 percent, to $11.22, after an industry group cut its forecast for semiconductor sales growth this year.
Among the gainers, Staples Inc. jumped $1.03, or 4.5 percent, to $24.18 after Dutch office supplies distributor Corporate Express NV accepted a $2.7 billion buyout offer from the U.S. office supplies retailer in a deal that analysts said will help expand the company's reach into Europe and elsewhere.
XTO Energy Inc. gained $2.94, or 4.4 percent, to $69.96 after the independent oil and gas company said it was buying privately held Hunt Petroleum in a cash and stock deal.
Oil and gas driller Nabors Industries Ltd. added $1.45, or 3.3 percent, to $45.35, helped by the higher price of crude. Shares earlier touched an all-time high of $45.85.
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