U.S. stocks dropped as oil prices approached $55 a barrel, renewing concern that fuel costs will curtail spending, and insurance companies became a target for New York Attorney General Eliot L. Spitzer. The Dow Jones industrial average fell to a two-month low and closed below 10,000.

"Oil is still on the top of everybody's list," said Peter Coolidge, a money manager with Deltec Asset Management in New York. "It adds more uncertainty to the mix."

Insurance stocks had their biggest losses in 41/2 years after Spitzer sued Marsh & McLennan for steering clients to certain insurers in return for payments. Two American International Group executives pleaded guilty to participating in the illegal conduct.

The Dow average shed 107.88, or 1.1 percent, to 9894.45, with American International and General Motors contributing the most to the decline. The benchmark, which closed below 10,000 for the first time this month, ended at its lowest since Aug. 13. The Standard & Poor's 500-stock index fell 10.36, or 0.9 percent, to 1103.29, erasing its gain for the year. The Nasdaq composite index retreated 17.51, or 0.9 percent, to 1903.02.

Two government reports raised concern about the pace of economic expansion. The number of Americans filing first-time jobless claims rose more than expected to 352,000 in the week ended Oct. 9, the Labor Department said. The U.S. trade gap widened in August to $54 billion, the second-largest on record, the Commerce Department said, reflecting record spending on imported oil and a drop in goods exported.

American International, the world's largest insurer, fell $6.99, to $60. Marsh & McLennan plunged $11.28, or 24.5 percent, to $34.85, for the steepest decline in the S&P 500. It was the stock's biggest drop in at least 24 years. Hartford Financial Services Group slid $3.78, to $58.40, and Aon shed $4.48, to $23.18.

General Motors sank $2.46, to $38.84, after the world's largest automaker cut its 2004 profit forecast. Third-quarter net income, three-quarters of which was produced by the finance unit, was below the average analyst estimate in a Thomson Financial survey. Ford Motor, the No. 2 U.S. automaker, declined 57 cents, to $13.12.

A gauge of oil and gas producers in the S&P 500 advanced 0.8 percent, leading the benchmark's two dozen groups. It's up 24 percent this year with the 68 percent surge in oil prices. Exxon Mobil rose 23 cents, to $48.71. Valero Energy, the third-biggest U.S. oil refiner, climbed 95 cents, to $41.26.

Apple Computer rose $5.23, or 13.2 percent, to $44.98, for the largest gain in the S&P 500. The maker of the iPod digital music player and iMac personal computers said fiscal first-quarter profit will be as much as 42 cents a share on sales of up to $2.9 billion. Analysts in a Thomson poll expected profit of 28 cents on sales of $2.5 billion.

Hewlett-Packard fell 52 cents, to $18.38, after Morgan Stanley cut its rating on the shares, citing signs the company is losing market share because of increased competition.

Novellus Systems slipped $2.38, to $24.50. The No. 3 U.S. maker of semiconductor equipment said fourth-quarter sales will drop from the previous period, missing analysts' estimates.

Other Indicators

* The New York Stock Exchange composite index fell 40.43, to 6516.10; the American Stock Exchange index rose 4.33, to 1277.73; and the Russell 2000 index of smaller-company stocks fell 4.54, to 564.88.

* Declining issues outnumbered advancing ones by 3 to 2 on the NYSE, where trading volume fell to 1.49 billion shares, from 1.55 billion on Wednesday. On the Nasdaq Stock Market, decliners outnumbered advancers by 9 to 4 and volume totaled 1.57 billion, down from 1.75 billion.

* The price of the Treasury's 10-year note rose $3.44 per $1,000 invested, and its yield fell to 4.02 percent, from 4.06 percent on Wednesday.

* The dollar fell against the Japanese yen and the euro. In late New York trading, a dollar bought 109.67 yen, down from 109.69 late Wednesday, and a euro bought $1.2399, up from $1.2338.

* Light, sweet crude oil for November delivery settled at $54.76, up $1.12, on the New York Mercantile Exchange.

* Gold for current delivery rose to $418.10 a troy ounce, from $413.20 on Wednesday, on the New York Mercantile Exchange's Commodity Exchange.