NEW YORK, AUG. 7 -- Just three weeks ago, the stock market was setting all-time record highs, and most of the gambling on Wall Street centered on when the Dow Jones industrial average would make financial history by closing above the magical 3,000 mark.

Today, Wall Street is wondering instead how low stocks will tumble before they hit bottom. Slammed by a quick, two-punch combination of an economic slowdown and an explosion in oil prices, the stock market has suffered a blow this month that is likely to leave it woozy for the rest of the year, according to a broad array of portfolio managers, economists and other market strategists.

Even before Iraq's bold military seizure of Kuwait last week, many experts were worried that the economy might be sliding into a recession. But when the Iraqi invasion touched off a 30 percent climb in free-market oil prices, the outlook on Wall Street worsened. That's because the hike in oil prices is expected to have the devastating twin impact of further damaging already weak corporate profits while simultaneously spurring inflation.

"We had a financial situation that was a bit like walking on eggshells, and the oil crunch is like a Mack truck coming out and driving over the eggshells," said Francis A. Scotland, managing editor of the International Bank Credit Analyst, a Montreal-based monthly investment publication.

The oil price jump is "a mega-deflationary shock for the whole global economy," Scotland said.

In addition to the direct damage to the economy, Iraq's invasion of Kuwait seems to be taking a more nebulous but equally damaging psychological toll. As the first "post-Cold War crisis," the invasion brought to a stunning end the wave of positive political news that began with last year's democratic revolutions in Eastern Europe.

"Don't forget, one of the things that has been driving world markets of late was the fact that walls were tumbling, democracy was spreading through the world, the Cold War was over. But now we're faced with the realization that there is one area in the world where things haven't gotten better, but only worse," said Mitchell Meisler, executive vice president for worldwide equity trading at the Lehman Brothers division of Shearson Lehman Brothers Inc. The Persian Gulf turmoil had a swift and severe impact on Wall Street. The stock market has fallen in each of the four days of trading since Thursday's invasion, and the Dow average has fallen a total of 188.62 points, or 6.5 percent, to today's close of 2710.64. That is down nearly 300 points from the all-time closing high, touched on both July 16 and 17, of 2999.75.

The immediate outlook for the market is very uncertain, as prices are likely to remain volatile until the political situation in the Middle East stabilizes, analysts said. A successful Western military action against Iraq could trigger a rally, as could investors out looking for bargains in the days and weeks ahead.

Looking at a time frame of the next few months, however, prospects for the stock market have turned discouraging. Richard T. McCabe, first vice president and manager of market analysis for Merrill Lynch, predicted that the Dow average would fall to between 2250 and 2400 within the next six to nine months.

Kenneth M. Spence, director of technical analysis for Salomon Brothers, said he expected that the market would stabilize for a time between the 2700 and 2750 level. But he said he was pessimistic about chances for a sustained rally from that point, partly because the recent slump in prices has not been an emotion-driven, "climactic sell-off" that usually marks a bottom for the market.

"This sell-off is fairly orderly. We don't have any significant institutional panicking," Spence said. "What that indicates to me is that there are still a lot of people left to sell."

For the stock market, the inflationary spurt that would result from higher oil prices has been particularly unwelcome, because it has made it significantly harder for the Federal Reserve Board to lower interest rates soon.

Lower rates normally help the stock market, both by spurring economic growth and by making stocks a more attractive investment compared to certificates of deposit or other interest-paying instruments. If the Fed eased monetary policy now and allowed interest rates to fall, however, it would risk pouring fuel on an inflationary fire sparked by the oil price increases.

Concerns about the economy were fanned a week before the Iraqi invasion, when the federal government stunned the financial markets by revising downward its calculation of the nation's economic growth dating all the way back to the spring of last year.

Abby Joseph Cohen, chief strategist for Barclays de Zoete Wedd, said the increasing signs of a slowdown have cast serious doubt on the economy.

"Even if everything turns around in the Middle East, and there is less concern about oil supplies," said Cohen, "one should not therefore conclude that all is well in the equity market."