Home Depot fell 3.4 percent to $40.58. The world's largest home-improvement retailer posted profits that failed to exceed Wall Street estimates, analysts said. Rival home improvement retailer Lowe's Cos. Inc fell 1.7 percent to $57.74.
The Dow Jones industrial average was down 101.68 points, or 0.94 percent, at 10,683.54. The Standard & Poor's 500 Index was down 9.65 points, or 0.80 percent, at 1,191.94. The technology-laced Nasdaq Composite Index was down 15.60 points, or 0.76 percent, at 2,043.02.
"The weaker dollar and higher crude prices are pulling down the market," said Steve Goldman, market strategist at Weeden & Co. "Home Depot seems to be hurting the home improvement stocks."
The dollar fell as market worries that central banks were diversifying reserves out of US assets pushed the currency below key technical support levels. A weaker dollar could lead foreign investors to pull out of US assets.
Meanwhile, US crude oil was up $2.15 to $50.50 a barrel after earlier hitting $51. Oil prices have risen $5 in the last two weeks as stronger-than-expected demand growth and disappointing supply forecasts from producers outside Opec - especially Russia.
On Nasdaq, chip maker Intel Corp climbed 0.5 percent to $23.92 and Cisco Systems Inc, whose equipment helps direct Internet traffic, rose 0.7 percent to $17.42 after Smith Barney added the companies to its focus list.
Smith Barney also raised its sector weighting on semiconductors and semiconductor equipment group. The Philadelphia Stock Exchange semiconductor index was up nearly 3 percent.
Federated Department Stores Inc fell 2.3 percent to $55.39 after the parent of Macy's and Bloomingdale's said first quarter earnings could come below average analyst expectations.
Shares of oil and gas producer Kerr-McGee Corp rose 5.7 percent to $74.51 after news on Friday that billionaire financier Carl Icahn and one of his funds plan to acquire up to $1 billion in the company's stock.
The Conference Board's gauge of consumer confidence fell to 104.0 in February from a revised 105.1 in January. The index was above economists' forecast for reading of 102.9.