NEW YORK - Wall Street tumbled Wednesday as the price of a barrel of oil soared to a record near $124 and touched off concerns that the stock market’s recent gains might have been premature as consumers grapple with rising energy and food costs.
The major stock market indexes each lost more than 1.5 percent, with the Dow Jones industrial average declining by more than 200 points.
Sharp gains in commodities prices have drawn fresh attention from investors worried that consumers — the lifeblood of the U.S. economy — will be forced to pare discretionary spending to keep up with increasing costs for necessities.
Oil prices have doubled over the past year, causing gasoline prices to surge further into record terrain and strap consumers, who drive more than two-thirds of economic activity, with another financial burden.
Wall Street slid amid a cacophony of worries about the effects of rising prices. Thomas Hoenig, president of the Kansas City Federal Reserve, pointed to inflation as his main concern in a speech late Tuesday.
Treasury Secretary Henry Paulson said in an interview with The Associated Press on Wednesday that while the worst of the credit crisis might have passed, rising gas prices will dampen the benefits from the 130 million economic stimulus checks that the government is distributing.
While some observers say recent stock market gains had come too quickly, others contend the market’s declines reflect more serious worries about consumers’ difficulties.
The Dow fell 206.48, or 1.59 percent, to 12,814.35, after fluctuating early in the session. Broader stock indicators also declined.