Stocks Plunge on Oil, Credit Worries

NEW YORK — Wall Street plunged in early trading Thursday as surging oil prices and slower growth in consumer spending erased optimism about the Federal Reserve's rate cut. The Dow Jones industrials skidded more than 200 points.

Inflation fears revived as crude oil vaulted to a record $96 a barrel. Meanwhile, a report from the Commerce Department indicated consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil.

That combination led investors to retreat from Wednesday's Fed-inspired rally, in which the Dow climbed 137 points. The biggest question that remains is if the central bank will cut rates again in December, or if rising inflation will force the Fed to stand pat.

Stocks also moved lower after Exxon Mobil Corp., the world's biggest oil company, posted a second-straight retreat in quarterly profit for the first time in five years. Citigroup Inc. and Bank of America Corp., the two biggest U.S. banks, were downgraded by CIBC on worries about the credit markets — causing financial stocks to tumble.

The Dow plunged 201.68, or 1.45 percnet, to 13,728.33 in the opening minutes of trading.

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