NEW YORK, Nov 16, 2007 (AP) -- US stocks fluctuated Friday as lingering concerns about the health of consumer spending, the banking sector and the overall economy zapped an early rally.

Stocks have fallen in six of the past seven sessions as investors have fretted about whether consumers would succumb to higher energy costs, rising mortgage costs and a faltering dollar. Continuing credit turmoil has also stirred concerns about the soundness of corporate balance sheets and profits.

Financial stocks fell in part due to a Fortune online story that raised the possibility the mortgage lender could be masking the true magnitude of credit-related hits to its profits. Fannie Mae executives, in a conference call, defended how the mortgage lender discloses losses on home loans.

The economic and corporate news arriving Friday offered investors little incentive to bid stocks higher. Industrial production in October showed the sharpest decrease in nine months.

Giving investors further reason for worry, FedEx Corp. lowered its earnings expectations for the fiscal second quarter and full year. Meanwhile, Starbucks Corp. slashed its earnings forecast for the fourth quarter after it reported traffic at stores open at least 13 months dropped by 1 percent.

In midmorning trading, the Dow Jones industrial average fell 23.98, or 0.18 percent, to 13,086.07.

Broader stock indicators slipped. The Standard & Poor's 500 index fell 5.18, or 0.36 percent, to 1,445.97, and the Nasdaq composite index fell 17.95, or 0.69 percent, to 2,600.56.

Government bond prices fell as stocks fluctuated. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.15 percent from 4.14 percent late Thursday. The dollar slipped against other major currencies, while gold prices rose.

In economic news, the Federal Reserve said output at the nation's factories, mines and utilities fell by 0.5 percent last month. The reading on industrial production was a much weaker showing than had been expected. The report found a big drop in utility output and continued troubles in autos and housing-related industries.

The fresh economic news follows concerns about the holiday shopping season that weighed on investors Thursday. J.C. Penney Co. and Kohl's Corp. scaled back projections for the holiday shopping season.

FedEx fell $3.75, or 3.7 percent, to $97.62 after lowering its forecast amid rising fuel costs and a troubled U.S. freight market. And Starbucks fell $1.90, or 7.9 percent, to $22.20 after the coffee retailer reported its first-ever decline in traffic at stores open more than a year. The company also said it plans to slow the pace of U.S. store openings.

Fannie Mae fell $4.20, or 9.8 percent, to $38.84. Other financial stocks also fell; JPMorgan Chase & Co. was down 91 cents at $42.62, while Citigroup Inc. fell 65 cents to $33.93.

An upgrade on Hewlett-Packard Co. failed to boost overall investor sentiment. Morgan Stanley raised its rating on the largest maker of printers to "overweight" from "equal weight." H-P shares rose 79 cents to $49.69.

Friday's sideways trading followed a 120-point drop in the Dow but the stabilization didn't signal a retrenchment of long-simmering concerns about woes in the credit markets. In particular, investors are concerned financial companies are facing a further souring of loans and will be forced to write down more than the $44 billion seen in the third quarter and the $30 billion companies have outlined for the fourth quarter.

Reports late Thursday said Residential Capital, the troubled mortgage lending arm of GMAC, was close to breaching bank loan covenants. The unit is operated by private equity fund Cerberus Capital Management and General Motors Corp., which may not step in with an infusion of additional capital, according to reports in the Financial Times and The Wall Street Journal.

Oil prices rose amid expectations that global crude supplies will remain tight despite a U.S. oil inventory report that showed a surprising build in domestic crude stockpiles. Light, sweet crude rose $1.84 to $95.27 on the New York Mercantile Exchange.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 420.9 million shares.

The Russell 2000 index of smaller companies fell 10.46, or 1.36 percent, to 761.14.

Overseas, Britain's FTSE 100 fell 0.95 percent, Germany's DAX index fell 0.83 percent, while France's CAC-40 shed 0.90 percent. In Asia, Japan's Nikkei stock average closed down 1.57 percent and Hong Kong's Hang Seng index fell 3.95 percent.