US STOCKS-Market falls on record oil price

(Updates to midday, adds byline)

* U.S. stocks drop on record oil price

* Consumer confidence falls to lowest in 28 years

* Energy stocks rise sharply

By Cal Mankowski

NEW YORK, May 16 (Reuters) - U.S. stocks fell on Friday after the price of oil hit a record and consumer sentiment data came in surprisingly weak, reviving concerns over spending.

The unease about the state of the consumer outweighed earlier optimism following a surprise rise in U.S. housing starts and stronger-than-expected earnings from retailers Nordstrom (JWN.N: Quote, Profile, Research) and Abercrombie & Fitch (ANF.N: Quote, Profile, Research).

U.S. consumer confidence tumbled to its lowest in 28 years this month, according to the Reuters/University of Michigan Surveys of Consumers, as short-term inflation expectations hit their highest since the stagflation era of the early 1980s.

The price of oil CLC1 shot to a record high near $128 a barrel after Goldman Sachs (GS.N: Quote, Profile, Research), the most active investment bank in energy markets, sharply raised its price forecast for the second half of 2008.