U.S. stocks faltered on Wednesday after a three-day rally as falling crude prices hurt energy stocks and disappointing Disney earnings dragged down the Dow industrials.

The market's decline was broad, with five stocks falling for every one rising on the New York Stock Exchange. Of the 10 S&P 500 sectors, only two defensive sectors -- health care and consumer staples -- were trading higher.

Energy and materials, sectors that have been laggards of late, led the decline as U.S. crude futures dropped. Concerns about slowed growth in China hit the cyclical sectors, which have teetered on worries about global demand.

Oil prices are down and that is affecting energy stocks today, said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois.

The S&P energy sector <.GSPE> dropped 2.2 percent and was the worst performing S&P sector. Chevron Corp was off 1.8 percent to $102.45, and Exxon Mobil Corp lost 1.5 percent to $81.61.

The Dow Jones industrial average <.DJI> slid 73.87 points, or 0.58 percent, to 12,686.49. The Standard & Poor's 500 Index <.SPX> fell 6.69 points, or 0.49 percent, to 1,350.47. The Nasdaq Composite Index <.IXIC> shed 6.92 points, or 0.24 percent, to 2,864.97.

Before Wednesday's declines, the benchmark S&P had risen 1.7 percent during the three-day run-up.

Dow component Walt Disney Co tumbled 3.8 percent to $42.26 a day after its quarterly revenues missed expectations.

Today, I don't think it's any big surprise (the market is down) with Disney reporting not such good numbers. Boy, they really missed it, said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

Among the bright spots, Macy's Inc jumped 8.3 percent to $28.51 after its profit topped estimates. The department store chain also offered an optimistic outlook for the rest of 2011.

Through Wednesday, 450 of the S&P 500 companies had reported, with 69 percent posting results above analysts' expectations, according to Thomson Reuters data.

American International Group Inc gained 4.2 percent to $30.85 after the insurer and the U.S. Treasury said they will sell nearly $9 billion in AIG stock.

The latest economic report from China showed industrial output growth eased in April, suggesting the world's second-biggest economy was cooling, reducing the need for more monetary policy tightening. But Chinese inflation remained high.

(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)

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