US STOCKS-Oil at $123 a barrel hits Wall St

                                
 (Updates to midday, changes byline)
                                
 By Cal Mankowski
                                
 NEW YORK, May 7 (Reuters) - U.S. stocks fell on Wednesday
as oil extended its record high above $123 per barrel, raising
concerns about the impact on inflation, consumer spending and
corporate profits.
                                
 A report showing the housing market remained in the
doldrums added to the cautionary tone, pressuring shares of
home builders.
                                
 As financial shares have led the market's recent gains,
some investors took profits, with American International Group
<AIG.N> among the Dow's top drags. The stock was down 3.4
percent at $46.85.
                                
 U.S. crude oil futures set another record at $123.23 per
barrel, even after weekly data showed a rise in crude oil
inventories. However, supply worries underpinned crude prices.
Energy shares slid after recent sharp gains.
                                
  Exxon Mobil Corp <XOM.N> shares fell 0.8 percent to $89.39
and Chevron Corp <CVX.N> fell 1 percent to $95.91. The S&P
index of energy shares <.GSPE> was down 0.8 percent.
                                
 "I think the market is just overbought at this stage and
needs a pause or even a little bit of a pullback.  Nothing goes
straight up, except, it seems, oil," said Paul Hickey,
co-founder of Bespoke Investment Group in Harrison, New York.
                                
  The Dow Jones industrial average <.DJI> fell 57.89 points,
or 0.44 percent, to 12,962.94. The Standard & Poor's 500 Index
<.SPX> declined 6.70 points, or 0.47 percent, to 1,411.56. The
Nasdaq Composite Index <.IXIC> lost 5.60 points, or 0.23
percent, to 2,477.71.
                                
 The market got a lift before the opening bell when
government data showed higher-than-expected productivity gains
and a lower-than-expected rise in unit labor costs.
                                
 Another report showed pending home sales fell as expected
in March. The National Association of Realtors Pending Home
Sales Index, based on contracts signed in March, fell to the
lowest since this index began in 2001.
                                
 Fannie Mae FNM.N, the largest provider of financing for
homes, fell 4 percent to $29.56 and shares of Freddie Mac
<FRE.N>, its smaller rival, fell 2.7 percent to $26.60.
                                
 The S&P financial sector index <.GSPF> was down 1.3
percent.
                                
 Sprint Nextel <S.N> and Clearwire Corp <CLWR.O> announced a
joint venture with investments from  cable companies aimed a
better competing against AT&T <T.N> and Verizon Co <VZ.N>, the
two top U.S. telecom companies.
                                
 Shares of AT&T were down 0.6 percent at $39.34 and Verizon
shares fell 0.5 percent to $38.68. But Sprint stock was up 0.2
percent to $9.21 and Clearwire shares rose 0.6 percent to
$16.56.
 (Additional reporting by Jennifer Ablan; Editing by Kenneth
Barry)