Stocks plummeted Monday as heightened fears of another hurricane hitting the Gulf Coast sent oil prices racing past $67 a barrel and investors grew anxious about the Federal Reserve's upcoming interest rate meeting.
With an intensifying Tropical Storm Rita nearing Florida's tip and poised to hammer the Gulf Coast just weeks after Katrina's devastation, the market retreated heavily late in the session amid light trading volume.
Crude oil made its biggest one-day gain ever, even as the Organization of the Petroleum Exporting Countries neared a consensus on selling 2 million additional barrels a day to offset a potential supply shortage from recent refinery shutdowns. On the New York Mercantile Exchange, a barrel of light crude jumped $4.39, to $67.39, as gasoline futures climbed 24 cents to $2.04 a gallon.
The Dow Jones industrial average dropped 84.31, or 0.79 percent, to 10,557.63.
Broader stock indicators also declined. The Standard & Poor's 500-stock index fell 6.89, or 0.56 percent, to 1231.02, and the Nasdaq composite index sank 15.09, or 0.7 percent, to 2145.26.
Although Wall Street is uncertain about what the Fed's decision on interest rates is likely to be, many analysts are predicting the central bank will continue lifting rates to stem inflation and will keep that as its main priority despite the widespread economic ripple left in Katrina's wake. The Fed's policy announcement is expected Tuesday afternoon.
"I don't see where they're going to be able to back down with inflation increasing the way it is and oil rising," said Bill Groenveld, head trader at vFinance Investments.
Groenveld also said Rita was another concern for the market as it approached the southern end of Florida en route to the Gulf of Mexico. Some meteorologists were forecasting that the storm could strengthen into a hurricane by Monday night.
Nike rose $4.99, to $83.45, on strong first-quarter earnings.
Sirius Satellite Radio fell 35 cents, to $6.70, after its higher forecast failed to meet analysts' targets.
New York Stock Exchange composite index fell 34.40, to 7611.89.
American Stock Exchange index rose 8.12, to 1729.44.
Russell 2000 index of smaller-company stocks fell 4.96, to 667.02.
NYSE: 2.07 billion shares, down from 3.14 billion on Friday. Decliners outnumbered advancers 2 to 1.
Nasdaq: 1.59 billion shares, down from 2.33 billion. Decliners outnumbered advancers 2 to 1.
Crude oil for October delivery: $67.39, up $4.39.
Gold for current delivery: $466.70 a troy ounce, up from $459.50 on Friday.