U.S. stocks fell on Monday as investors feared the financial sector could face further losses from the housing slump, compounding the troubles facing the economy.

A sudden slide in the price of oil dragged energy shares lower but helped curb some of the broader market's losses. The $5 drop was partly on concern that a global slowdown would blunt demand.

The tone for the financial sector was set early on in the session, after HSBC, Europe's biggest bank, reported a 28 percent fall in first half profit as it took a $14 billion hit from bad debts on U.S. home loans and asset write-downs.

Data pointing to mounting U.S. price pressures added to the market's concerns, as did news WCI Communities, a major U.S. home builder, had filed for bankruptcy.

"We've seen continued weakness in financial stocks and there are concerns still lurking there, especially after HSBC indicated they're facing continued issues," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama.

"And investors are trying to figure out whether the sudden dramatic decline in the price of crude oil is a sign we are entering into a global slowdown, which would further pressure the consumer."

The Dow Jones industrial average fell 17.67 points, or 0.16 percent, to 11,308.65. The Standard & Poor's 500 Index dropped 6.31 points, or 0.50 percent, to 1,254.00, while the Nasdaq Composite Index shed 19.38 points, or 0.84 percent, to 2,291.58.

Also pressuring the financial sector were shares of Wachovia Corp, which dropped 8.1 percent to $17.45, after a Wall Street analyst suggested investors unload shares of the fourth-largest U.S. bank.

The S&P financials sub-index fell 0.9 percent.

Shares of energy companies were the biggest drags on the Dow and S&P 500, with Exxon Mobil shares down 2.9 percent at $77.37 and Chevron down 1.4 percent at $83.11.

The Dow Jones home construction index fell 1.9 percent to $271.66, after WCI Communities said it filed for Chapter 11 bankruptcy protection because it failed to obtain the financing that would keep $1.8 billion of debt out of default.

Investors were unnerved by government data that showed U.S. consumer prices jumped at the sharpest rate in more than a quarter century during June. The data showing accelerating inflation came a day before a Federal Reserve policy meeting at which the U.S. central bank is expected to keep rates on hold at 2 percent.

U.S. crude was down about $4 at $121.27 a barrel after earlier dipping below $120.

The slumping U.S. housing sector, however, remained a top concern. New York University economics professor Nouriel Roubini said in Barron's newspaper that the United States is in the early stages of a recession that will last for at least 18 months and help cause hundreds of banks to fail.

On the Nasdaq 100, shares of chip maker Qualcomm was the biggest drag on the index, dropping 3.4 percent to $53.61 after Motorola announced it at hired Qualcomm's chief operating officer to head its money-losing mobile devices unit.