NEW YORK, May 7 (UPI) -- U.S. stock indexes tumbled to the close Wednesday on reports of declines in pending home sales in March and a record price above $123 per barrel for crude oil.

The Dow Jones industrial average fell 1.59 percent to 12,814.35, down 206.48 points. The Standard and Poor's 500 index dropped 1.81 percent to 1,392.57, down 44.82 points. The Nasdaq composite index of tech-dominated stock fell 1.8 percent to 2,438.49, down 44.82 points.

On the New York Stock Exchange, 876 stocks advanced and 2,243 declined on a volume of 1.277 billion shares traded.

The 10-year U.S. Treasury note gained 20/32 to yield 3.844 percent.

The dollar was mixed. The euro traded at $1.5392 from Tuesday's $1.5524, while the dollar traded at 104.68 yen from Tuesday's 104.71 yen.

In Tokyo, the Nikkei index gained 53.22 points to 14,102.48, up 0.38 percent.

In London, the FTSE 100 index gained 45.80 to 6,261.00, up 0.74 percent.

Luxury real estate meets market realities

FORT LAUDERDALE, Fla., May 7 (UPI) -- Many U.S. luxury homes are facing the same fate as foreclosed properties, the sometimes painful reality check of the cash auction, Realtors report.

It is rare for luxury homes to fall into foreclosure in normal market conditions, ABC News said Wednesday.

But, wealthy homeowners are turning to auction sales and taking their lumps, because buyers pay upfront, in cash, closing within 30 days of the auction.

An auction sale eliminates the chance -- during a severe credit crunch -- that the homeowner will be denied financing. But, high end properties are often selling for far less than the homeowners intended.

A 4-bedroom home in Scottsdale, Ariz., which was listed for $3.2 million, was put up for sale at auction with an opening bid of $1.5 million, ABC reported. Townhouses and condos in Fort Lauderdale, Fla., with list prices between $450,000 and $650,000 have been selling at auction for $330,000.

"It comes down to market realities," said Rick Sharga, vice president at RealtyTrac. "If you want to get out from under that house, you're going to be at the mercy of whatever the market conditions are at the time, just like everybody else."

Gates says Internet still a Microsoft goal

TOKYO, May 7 (UPI) -- Software giant Microsoft Corp. (NASDAQ:MSFT) has ended its pursuit of Internet search engine Yahoo! Inc. (NASDAQ:YHOO), company Chairman Bill Gates said in Tokyo, Japan, Wednesday.

Gates said the company would pursue "an independent strategy" in its pursuit of a bigger share of the online advertising and Internet business, the Los Angeles Times reported.

Formal talks to purchase Yahoo! ended last weekend, three months after Microsoft bid $44.7 billion for the company.

At a press conference in Tokyo, Gates said Microsoft "will make the advances that give people a great choice there."

In South Korea on Tuesday, Gates said Microsoft was still open to forming partnerships with other Internet companies.

Microsoft owns 1.6 percent of Facebook, the second-largest social network Web site behind MySpace.

Likely candidates for partnerships that would advance Microsoft's Internet presence include Time Warner Inc. (NYSE:TWX)'s AOL, News Corp.'s MySpace and LinkedIn Corp., the report said.

Healthcare costs tip against U.S. firms

WASHINGTON, May 7 (UPI) -- Healthcare costs in the United States are rising faster than wages and productivity, an economic policy director said Wednesday.

To keep up, U.S. businesses need to raise prices, but "you can't do that," economist Len Nichols, a policy director for the New American Foundation told the Los Angeles Times.

A new study found that U.S. manufacturers are paying twice what foreign competitors pay for healthcare, which averages $2.38 per hour in the United States, the Times reported.

George Rudes, chief executive officer of Not Your Daughter's Jeans in Vernon, Calif., said the best deal he could find for his 100 factory workers -- with the company paying 50 percent of the bill -- was rejected by employees, who would have had to contribute $80 per month.

The factory pays 10 percent above minimum wage, Rudes said.

"They just can't afford it. How can anybody afford $4-a-gallon gasoline and insurance?" Rudes asked.

On the other hand, if U.S. jobs move overseas "who is going to be able to buy our middle-class stuff?" Nichols asked.