NEW YORK — Anxiety is making a comeback on Wall Street.
Stocks skidded again Wednesday, marking their worst two-day performance since February, as crude oil leaped above $134 a barrel and the Federal Reserve issued a downbeat economic forecast without any suggestion of further interest rate cuts.
The Dow Jones industrial average tumbled 227.49 points, or 1.8%, to 12,601.19, and the Standard & Poor's 500 index slumped 1.6%. The Dow is down nearly 430 points in the last two days.
After rising steadily from the depths of credit-crisis and recession worries 10 weeks ago, the stock market this week shifted back into apprehension mode. Many investors, increasingly concerned about the effect of high oil prices on consumer wallets and corporate bottom lines, seem willing to yank money out of the market at the first sign of trouble.
"Fear crept back in really fast," said John Bollinger, head of Bollinger Capital Management in Manhattan Beach. "Over the past nine months, the downside has been so dramatic that it's hard for people to believe in the upside. The market goes down 50 points and people think it'll go down 100. It goes down 100 and people think it'll go down 200."
Oil soared after the government released data showing that reserves fell last week. Crude futures traded as high as $134.15 before finishing the day up $4.19 at a record close of $133.17 a barrel in New York.
The continuing ascent of energy prices sent airline stocks into severe turbulence Wednesday as AMR, parent of American Airlines, said it would eliminate some flights to offset steep fuel costs. The carrier also said it would impose a $15 fee on the first piece of luggage checked by a traveler.
AMR shares plunged $1.98, or 24%, to $6.22. UAL, operator of United Airlines, sank $3.41, or 29%, to $8.15. Delta Air Lines fell $1.13, or 16%, to $5.77.
As crude prices climb further into uncharted territory, investors worry that higher gasoline prices will lead consumers to cut back spending on things other than fuel and that companies won't be able to pass the full extent of rising raw-material costs to customers, hurting profits.
Although such inflationary concerns aren't new, the market had been willing to overlook them as it celebrated the Fed's interest rate cuts and other actions to combat the housing meltdown and credit crunch.
