In late morning trading, the Dow Jones industrial average fell 49.70, or 0.5 percent, to 10,059.48, one day after the index lost more than 135 points.

Broader stock indicators were modestly mixed. The Standard & Poor's 500 index was down 3.21, or 0.3 percent, at 1,110.35, and the Nasdaq composite index gained 2.99, or 0.2 percent, to 1,888.70.

A lower reading of the Conference Board's index of leading economic indicators, the third straight monthly decline, sent a signal to the markets that economic growth has been slowing and would likely taper off through the end of the year.

Analysts said oil prices, which shot past $48 Wednesday, would keep consumer spending down and business costs rising, a combination that will squeeze profit margins and lower third-quarter earnings. A barrel of light crude was quoted at $48.18 Thursday, down 17 cents, on the New York Mercantile Exchange.

``When you take a look at the leading economic indicators, it's very clear that the price of oil is having an impact on the economy,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``Just look at the negative earnings statements from some of the most stable companies out there. If the markets are going to move higher, we're going to need some relief on the oil front so that the earnings picture improves.''

The Conference Board said its Composite Index of Leading Economic Indicators fell 0.3 percent in August to 115.7, following a decline of 0.3 percent in July and larger than the 0.2 percent drop forecast by economists. The index, which measures the potential for future economic growth, left Wall Street with reduced hopes for a strong finish to the year, though the Conference Board said the three months of decreases were not enough to signal an end to growth entirely.

Investors' concerns about job growth -- and the resulting consumer spending -- increased as the Labor Department reported a 14,000 increase in first-time jobless claims for the week. While the hurricanes in Florida were blamed for the jump, investors have been hoping for a return to this spring's strong job growth as a sign of strength in the economy.

One day after Morgan Stanley's disappointing earnings dragged on the brokerage sector, A.G. Edwards Inc. reported results that also fell short expectations. The company's stock fell 31 cents to $34.16 after A.G. Edwards missed estimates by 3 cents per share. Morgan Stanley rebounded 63 cents to $49.35.

A downgrade of the entire petroleum sector by Deutsche Bank weighed heavily on energy stocks, and particularly on ExxonMobil, which was separately downgraded by the brokerage firm because it felt the stock was fairly valued with limited potential to move higher. ExxonMobil dropped $1.02 cents to $47.84.

Martha Stewart Living Omnimedia Inc. jumped $2.38 to $17.36 after the company announced an agreement with reality television producer Mark Burnett to collaborate on new television programming. The move will refresh the company's television offerings as Martha Stewart prepares to serve a five-month prison sentence.

Pharmacy chain Rite Aid Corp. broke even for its second quarter, compared to a loss a year ago. Wall Street had been expecting the company to lose 2 cents per share for the quarter. Rite Aid slipped 7 cents to $3.69.

The tech sector saw another company post a profit warning as Andrew Corp. said it would miss its fourth-quarter forecasts due to higher costs and lower demand. The telecommunications system provider nonetheless rose 31 cents to $11.53.

Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume came to 542.9 million shares, compared to 580.47 million at the same point Wednesday.

The Russell 2000 index of smaller companies was up 0.21, or 0.04 percent, at 566.10.

Overseas, Japan's Nikkei stock average fell 0.6 percent. In afternoon trading, Britain's FTSE 100 was down 0.5 percent, Germany's DAX index slid 0.9 percent, and France's CAC-40 dropped 1.1 percent.