NEW YORK — Wall Street pitched lower for the second straight session Wednesday as record oil prices and a bleak economic assessment from the Federal Reserve deepened investors’ worry about rising costs and a shaky employment picture. The Dow Jones industrial average fell 227 points, logging its widest two-day loss since late February.
Early in the day, stocks began falling on the surging price of oil, which shot up more than $4 and breached $134 a barrel for the first time on the futures market Wed nesday.
The stock market slumped further after minutes from last month’s Fed meeting revealed that while policymakers expected sharply lower economic growth and higher unemployment later this year, inflationary risks are likely to keep the central bank from cutting rates again. Lower interest rates spur economic growth, but they also tend to accelerate inflation.
High commodities prices have been a big source of anxiety for investors, as many retailers and credit-card companies have noticed consumers paring back spending on discretionary items, including clothing and jewelry, to be able to afford necessities such as gas and groceries.
Meanwhile, the Fed’s minutes suggest the central bank’s two main priorities — making sure the economy is growing and keeping inflation in check — are going to be tough to achieve through monetary policy. That is a troubling prospect for investors hoping that the economy will bounce back in the second half of the year and that the central bank will be able to concentrate on controlling inflation.
The Dow fell 227.49, or 1.77 percent, to 12,601.19, after falling nearly 200 points Tuesday. The blue-chip index’s two-day drop of about 427 points, or 3.3 percent, is its biggest since Feb. 28-29.
Broader stock indicators also stumbled. The Standard & Poor’s 500 index fell 22.69, or 1.61 percent, to 1,390.71, while the Nasdaq composite index fell 43.99, or 1.77 percent, to 2,456.09.
Government bond prices rose as investors searched for safer assets.
Crude oil soared $4.19 to settle at $133.17 a barrel on the New York Mercantile Exchange — about $20 higher than it was at the beginning of May. It passed $134 a barrel in after-hours trading.
“There’s almost a parabolic rise going on,” said Richard Cripps, chief market strategist for Stifel Nicolaus. “I do sense that the stock market is searching for where that oil peak is going to be, but till it finally gets there and backs off, I think the stock market is under pressure.”
Strong demand out of China, supply disruptions in Nigeria, the dollar’s slump versus other world currencies, and political tension in the Middle East have been keeping oil on the incline.
