* Brent crude hits lowest level since July 2009
* Costco, Toll Brothers post quarterly results
* Indexes off: Dow 0.95 pct, S&P 0.87 pct, Nasdaq 0.71 pct (Updates to late morning)
By Chuck Mikolajczak
NEW YORK, Dec 10 (Reuters) - U.S. stocks were lower near midday on Wednesday, weighed down by a sharp decline in the energy sector on the latest weakness in oil prices.
The S&P energy index was off 3.5 percent, the worst performing S&P sector, on track for its fourth drop in five sessions, as Brent crude touched a new five-year low of $63.56 on signs of oversupply and soft demand.
The sector is the worst performing of the 10 major S&P sectors for the year, down more than 15 percent, and the only group in negative territory. Falling oil prices have raised concerns about earnings for energy companies, with year-end tax selling putting additional pressure on the group.
"Oil seems to be the one theme that has more control over the direction of the market and the degree that volatility emerges than any other theme right now," said Peter Kenny, chief market strategist at Clearpool Group in New York.
"It is the driver of direction and will be until we find some stability, some sort of a price range that is significantly more predictive than what we've seen, that the market can start pricing in and using it as less of a variable and more of a constant."
After climbing to its most recent record high on Friday, the S&P 500 has fallen 1.6 percent and is now up 9.6 percent from its October low.
The Dow Jones industrial average fell 169.67 points, or 0.95 percent, to 17,631.53, the S&P 500 lost 17.88 points, or 0.87 percent, to 2,041.94 and the Nasdaq Composite dropped 33.73 points, or 0.71 percent, to 4,732.73.
Costco Wholesale Corp reported a better-than-expected quarterly profit as increased promotions helped the warehouse club operator deal with fierce competition. Its shares slipped 0.5 percent to $142.36.
Toll Brothers lost 4 percent to $33.39 after the homebuilder posted quarterly results. The PHLX housing sector index shed 1.3 percent.
Yum Brands Inc lowered its profit forecast for the year for the second time, hurt by slower-than-expected sales recovery in China following a food safety scare in July. Its shares dropped 4.5 percent to $71.80.
Declining issues outnumbered advancing ones on the NYSE by 2,254 to 755, for a 2.99-to-1 ratio; on the Nasdaq, 1,783 issues fell and 817 advanced for a 2.18-to-1 ratio.
The S&P 500 was posting 31 new 52-week highs and 21 new lows; the Nasdaq Composite was recording 73 new highs and 58 new lows. (Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)