Plunging past the 10,000 mark, the Dow Jones industrial average dropped to its lowest level in two months today as investors faced up to the implication of ever-rising oil prices.
Crude oil jumped $1.07 a barrel to $54.70 -- another new record -- and drew blame for a massive increase in the nation's trade deficit in August.
The gap between America's imports and exports widened by almost 7 percent to $54 billion -- the second worst ever -- largely because so much money was spent buying oil from abroad.
Wall Street's worries about the economy were worsened by another government report showing new applications for unemployment benefits also are climbing -- up 15,000 last week to a seasonally adjusted level of 352,000. The four-week moving average of claims, which smooths out weekly changes, rose by 4,000 to a seven-month high of 352,000.
In Washington, the other deficit dominated the day's worries. To keep the federal government budget deficit from exceeding the limit set by Congress, Treasury Secretary John Snow was forced to resort to accounting tricks. Among them: postpone making payments into government workers' pension plans -- a tactic that has been used by U.S. Airways and other bankrupt airlines.
Congress could easily enough raise the debt limit -- as it has done dozens of times -- but Republican leaders were not willing to bring up the necessary legislation just before elections in which the deficit is already a major issue.
If the economic news weren't enough to drive down stock prices, there were corporate developments to blame as well.
The Dow's biggest loser was American International Group Inc., the giant insurance company, which is involved in the latest attack by New York Attorney General Eliott Spitzer on corrupt business practices. Two AIG executives have pleaded guilty to price-fixing charges in a probe that today widened to include several major insurance brokers.
AIG's stock fell 10 percent and not far behind was General Motors, whose shares closed down 6 percent after GM reported paltry quarterly profits. GM said it lost money on its car business -- for the first time in six years -- and made up for only part of the deficit with the earnings of General Motors Acceptance Corp., the division that finances cars and makes other loans.
The Dow finished the day off 108 point at 9,894.45, its lowest close since Aug. 13.
Standard & Poor's 500 stock index fell 10 points to 1,103.29.
The Nasdaq Stock Market composite index dropped almost 18 points to 1,903.02.
Stock traders laid most of the blame for today's decline on the oil market where prices leaped in response to the latest government reports on oil supplies. Crude oil stocks are growing, the data shows, but not supplies of gasoline and heating oil, which are continuing to dwindle.
But anxiety about the presidential race -- which seemed closer than ever after Wednesday night's final debate -- also added to the market's woes. Some Wall Street pundits are predicting the market will remain weak until the election because investors are unwilling to make commitments when the future of the country's leadership is in doubt.