NEW YORK (AP) — Stocks declined early Wednesday after FedEx Corp. warned that weakening demand and surging fuel costs would likely leave its fiscal 2009 profit well below what Wall Street had been predicting.

The shipping concern's difficulties with surging energy costs serve as the latest sign that the spike in oil prices, which have nearly doubled in the past year, are exacting a burdensome tax on businesses and consumers alike.

Wall Street is also digesting results from another trouble spot in the economy: the financial sector. Morgan Stanley reported a stronger-than-expected fiscal second-quarter profit because of increased trading and asset sales. But earnings at the nation's second-largest investment bank fell 61 percent from a year earlier as revenue declined sharply.

And a regional bank, Fifth Third Bancorp, said it plans to cut its dividend by nearly two-thirds, raise $1 billion through an offering of preferred stock and raise another $1 billion through the sale of businesses.

In the first hour of trading, the Dow Jones industrial average fell 39.73, or 0.33 percent, to 12,120.57.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 6.98, or 0.52 percent, to 1,343.95, and the Nasdaq composite index fell 11.01, or 0.45 percent, to 2,446.72. The blue chips fell more than 100 points Tuesday.

Light, sweet crude rose 38 cents to $134.39 in premarket electronic trading on the New York Mercantile Exchange. Weekly government domestic inventory figures were due at midmorning. Though often volatile, the week-to-week numbers have drawn increased attention in recent months as investors look for any clues about where energy prices are headed.

The run-up in oil has unnerved some on Wall Street and raised the prospect that strapped consumers are going to pare spending on some discretionary items because they are forced to reach deeper into their wallets at the gas pump.

Bond prices rose as stocks declined. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 4.19 percent from 4.20 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

In corporate news, FedEx predicts it will earn $4.75 to $5.25 per share for the fiscal year that began this month, below the $5.92 per share analysts had expected, according to Thomson Financial. The stock fell $2.21, or 2.6 percent, to $82.12.

Among financials — one of the weakest performing sectors in the early going — Morgan Stanley fell $1.87, or 4.6 percent, to $38.72, while Fifth Third declined $2.07, or 16.3 percent, to $10.66.

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