US stocks slip after UPS warning

US stocks slid Tuesday after UPS Inc. issued a second-quarter profit warning, saying rising fuel costs are hurting its earnings.

Energy prices show few signs of waning, leading to worries on Wall Street that more expensive energy will prevent the economy from growing and aggravate inflation at the same time. Light, sweet crude rose 13 cents to $136.87 a barrel on the New York Mercantile Exchange.

Tuesday did bring some positive earnings news. Grocery chain Kroger Co. said its fiscal first-quarter profit rose 15 percent thanks to gasoline and food sales offered at a discount.

But investors appeared wary about buying back into the stock market ahead of the Fed policymakers' meeting Tuesday and Wednesday. The central bank will announce Wednesday afternoon its decision to change or hold the key federal funds rate steady at 2 percent. With the economy weak and price pressures rising, the central bank is in a tough spot -- if rates are low, the economy has more chance to expand, but inflation can accelerate, too.

In the first hour of trading, the Dow Jones industrial average fell 59.68, or 0.50 percent, to 11,782.68 after closing nearly flat on Monday.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 5.49, or 0.42 percent, to 1,312.51, and the Nasdaq composite index fell 9.25, or 0.39 percent, to 2,376.49.

(Agencies)