US STOCKS-Wall St drops as Oracle hits tech, banks drag

(Updates to early afternoon, changes byline)

By Ellis Mnyandu

NEW YORK, March 27 (Reuters) - U.S. stocks fell in volatile trade on Thursday as a revenue shortfall at Oracle Corp (ORCL.O) fueled a technology sector sell-off on concerns about downturn in a business spending.

Investors took the news from Oracle, seen as a bellwether for the software industry, as signaling the widening impact of the housing slump on corporate spending.

Oracle shares topped the list of major decliners in both the Nasdaq and the Standard & Poor's 500 Index with a slide of more than 6 percent.

A drop in Google Inc's (GOOG.O) shares after a brokerage cut its price target on the Web search leader added to anxieties about tech stocks.

"The problem with Oracle was that they said they see a little bit of a slowdown and that's scaring everybody," said Dave Rovelli, managing director of U.S. equity trading at Canaccord Adams in New York.

The Dow Jones industrial average .DJI slid 76.69 points, or 0.62 percent, to 12,346.17. The Standard & Poor's 500 Index .SPX dropped 8.16 points, or 0.61 percent, to 1,332.97. The Nasdaq Composite Index .IXIC slumped 30.23 points, or 1.30 percent, to 2,294.13.

Oracle shares dropped to $19.47 on the Nasdaq, while shares of Apple Inc (AAPL.O), the computer and iPod maker, shed 2.3 percent to $141.83.