Stocks plunged for a second straight session yesterday as Wall Street battled a storm of negative factors - soaring oil prices, interest-rate jitters, and a slowing economy. The Dow Jones industrial average dropped almost 167 points, bringing its two-day loss to 288. Escalating tension in the Middle East carried oil near $77 a barrel, which compounded worries over Merrill Lynch & Co. Inc.'s warning that higher lending rates and gasoline prices would likely pressure consumer spending at Wal-Mart Stores Inc. SAP AG rattled investors further after reporting weak software sales last quarter.
Many on Wall Street feared that the day's headlines signaled a worst-case scenario. Continued gains in energy prices could prompt the Federal Reserve to keep raising interest rates to contain inflation, but a recent spate of downbeat earnings news suggested that economic growth was already moderating. Investors fear that higher rates in a cooling economy could lead to a recession.
