Stocks fell Thursday, with all three indexes posting new 2005 lows, as Apple's cautious revenue forecast and IBM's surprisingly bad results raised investor concerns about companies' profits.

The Dow Jones industrial average (search) was down 125.18 points, or 1.20 percent, to close at 10,278.75. The Standard & Poor's 500 Index (search) was down 11.74 points, or 1.00 percent, to end at 1,162.05. The technology-laced Nasdaq Composite Index (search) was down 27.66 points, or 1.40 percent, at 1,946.71.

International Business Machines Corp. (IBM), the world's largest computer company, posted quarterly results after the market closed and a week ahead of schedule. IBM's stock fell 4.2 percent to $80.15 on the Inet electronic brokerage from a close at $83.64 on the New York Stock Exchange.

"This is a complete, unpleasant surprise. It looks like revenue and earnings came in lighter than expected. I think investors may be very nervous that they unexpectedly reported tonight," said Steve Neimeth, portfolio manager at AIG SunAmerica Mutual Funds, who owns about 200,000 shares of IBM.

IBM's disappointment added further pressure to the market, especially tech shares, which were pulled lower by Apple Computer Inc..

Apple (AAPL) fell 9.2 percent, or $3.78, to $37.26 a day after the computer maker's revenue forecast lagged some analysts' expectations. It was the greatest drag on the Nasdaq.

Analysts said the day's trading reflected anxiety about interest rates and the economy. But with the earnings season just barely under way, some said it was too early to assume the worst, seeing the declines as a good chance to buy low.

"We don't think any kind of concrete opinion about earnings can come be formed yet because we're still in the early stages," said Brian G. Belski, market strategist at Piper Jaffray. "We are in defensive, reactionary times, which longer term, have traditionally provided good entry points."

U.S. crude oil futures settled up 91 cents to $51.13 a barrel after falling as low as $49.75, the first time below $50 in seven weeks. Brent crude for May , which expires later on Thursday, rose 43 cents to $50.91 a barrel.

The number of Americans seeking unemployment benefits for the first time fell by 10,000 last week, a second straight week of improvement. That brings the four-week moving average, designed to smooth out volatility, to 338,000, a level still seen as signaling improvement in the job market. The weekly data was in line with expectations.

General Motors Corp. (GM) fell to a 12-year low after United Auto Workers officials indicated they were not willing to reopen a labor contract to negotiate lower health care costs. The automaker lost 5.9 percent, or $1.67, to $26.66, making it the worst performing stock on the Dow.

Kerr-McGee Corp. (KMG) rose 6.7 percent, or $4.93, to $78.90 after the oil and gas company said its board had authorized a tender offer to buy back up to $4 billion of the company's common stock at a price between $85 and $92 per share. Separately, the company said it reached a settlement with billionaire financier Carl Icahn, certain affiliated funds and Jana Partners LLC, who own 7.5 percent of Kerr-McGee collectively and were seeking election to the company's board.

Chemical stocks slid on fears of a slowdown in demand. DuPont Co. (DD), a Dow component, was down 2.7 percent, or $1.33, at $47.36, while Dow Chemical Co. (DOW) dropped 3.3 percent, or $1.55, to $45.28.

Companies especially sensitive to economic swings were hit hard, with shares of heavy equipment maker Caterpillar Inc. (CAT) falling 3.6 percent, or $3.20, to $85.40. Aluminum maker Alcoa Inc. (AA) slipped 1.6 percent, or 50 cents, to $29.90. Both are among the 30 stocks in the Dow.

Mentor Corp. (MNT) surged 7.3 percent, or $2.58, to $37.91, after the FDA recommended its silicone-gel breast implants be returned to the market after being virtually banned for 13 years, as long as the company heeds certain conditions.

Trading was heavy, with 1.90 billion shares changing hands on the New York Stock Exchange, well above the 1.46 billion daily average for last year. About 1.95 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

Declining shares outnumbered advancing shares on the New York Stock Exchange by a ratio of more than 3 to 1 and by a similar margin on Nasdaq.

The Russell 2000 index, which tracks smaller company stocks, was down 10.60, or 1.76 percent, at 591.94.

Overseas, Japan's Nikkei stock average shed 0.64 percent. In Europe, France's CAC-40 declined 0.14 percent, Britain's FTSE 100 lost 0.31 percent and Germany's DAX index slipped 0.08 percent.

Reuters and the Associated Press contributed to this report.