Wall Street fell after oil surged above USD 100 a barrel, erasing earlier gains on concerns that higher energy costs could fan inflation and cut consumer spending and profits.

Consumer and technology shares were the biggest losers. However energy shares rose, propelling Exxon Mobil and Chevron to end with over 1.5% gains.

Financials dropped 0.8% after traders eliminated bets the Fed will lower the target lending rate by 75 bps at its next meeting. Homebuilder sentiment rose unexpectedly in February. The Wells Fargo Housing Market Index climbed to 20 from 19 in January.

AT&T and Verizon Wireless, the two biggest US mobile-phone carriers led telephone stocks to the lowest level since September 2006 on concern competition will cut profits. Reports suggest that Microsoft will authorize a proxy fight at Yahoo to press ahead with its takeover battle for the Google rival. All three stocks ended lower.

The Dow Jones industrial average was down 10.99 points, or 0.09%, to 12,337.22. The Standard & Poor's 500 index slipped 1.21 points, or 0.09%, to 1,348.78; and the Nasdaq composite fell 15.60 points, or 0.67%, to 2,306.20.