The stock market ended mixed on Tuesday as a $7 drop in oil prices wasn't enough to keep the Dow from closing below 11,000 for the first time in two years. 

Today's Market

The Dow Jones Industrial Average fell 92.65 points, or 0.84% to 10962.54, the Standard & Poor’s 500 index dropped 13.39 points, or 1.09%, to 1214.91 and the Nasdaq Composite Index rose 2.84 points, or 0.13%, to 2215.71. The consumer-friendly FOX 50 lost 6.73 points, or 0.77% to 867.76.

The back-and-forth trading day ended on a down note, with the Dow closing at its lowest levels of the afternoon on tumbling financial stocks. It could've been a much worse day on Wall Street as the Dow was 225 points in the red during morning trading after Federal Reserve Chairman Ben Bernanke described the inflation picture as "unusually uncertain." 

Still, the Dow closed the day below 11,000 for the first time since July 2006. Last week the blue chips flirted with that psychologically-important level but closed above it. The bears have taken control on Wall Street, wiping out 2,000 points on the Dow since late May.

General Motors (GM) posted the biggest gains on the Dow on Tuesday, soaring nearly 5% on the oil price plunge and a restructuring plan aimed at boosting liquidity by $12 billion. Also, Johnson & Johnson (JNJ) rose on better-than-expected earnings report. On the downside, AIG (AIG) tumbled as much as 10% after the insurer was downgraded by Wachovia. 

The Nasdaq Composite performed better than the broader market, squeaking out tiny gains ahead of chip giant Intel's (INTC) quarterly earnings report. 

The Dow failed to hold onto an afternoon rally even after oil prices suffered their largest one-day decline in dollar terms since January 1991. Crude plunged as much as $9 over just a several-minute span during a volatile morning session. Oil closed at $138.74 a barrel, down $6.44 on the day.

Energy traders attributed the oil plunge to expectations that the economy will continue to struggle in the near-term. The decline in oil prices weighed heavily on energy stocks like Chevron (CVX) and Schlumberger (SLB).

Wall Street continues to be at the whim of the tumultuous financial sector, which has been hammered over the past few trading days on a series of rumors and negative analyst notes. Financial stocks showed life earlier in the day but ended solidly in the red. 

The latest worries on Wall Street surround fears that several regional banks could turn into the next IndyMac (IMB), the California-based mortgage bank that failed on Friday. The fears have grown so loud that three separate banks have released statements over the past two days aimed at reassuring the markets.

The newest statement came from Wachovia (WB), whose stock initially soared after it said it is "well-capitalized, fundamentally strong and has $150 billion in liquidity funding capability, according to Dow Jones. Late in the day Wachovia's stock slumped again, closing nearly 8% in the red. 

Similarly, Washington Mutual (WM) and Ohio-based lender National City (NCC) released statements on Monday that have had mixed results in quelling fears. WaMu's stock soared after it said it is well-capitalized and has excess liquidity of more than $40 billion. 

Mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) continue to see their stocks plunge despite government plans to backstop them. The companies, which own or back more than $5 trillion of U.S. mortgages, closed more than 20% in the red on Tuesday. 

The market didn't initially react well to Bernanke's updated economic forecast, which was released as he testified on Capitol Hill. Bernanke acknowledged that the U.S. economy still faces "numerous difficulties," including an "unusually uncertain" inflation outlook. 

The central bank revised its 2008 GDP forecast to a range of 1% to 1.6%. However, the Fed is also boosting its inflation forecast to a range of 3.8% to 4.2% in 2008. 

The corporate news of the day was headlined by General Motors (GM), which released plans to boost its liquidity by $12 billion by 2009. The storied U.S. auto maker said it plans to restructure its business by slashing salaried employment costs by more than 20%, suspending its dividend, selling up to $4 billion of assets and borrowing up to $3 billion. 

Corporate Movers

Intel (INTC) beat the Street and issued bullish guidance after the market closed on Tuesday. The chip giant and tech bellwether earned 28 cents a share in the second quarter, better than the 25 cents analysts had been looking for. For the third quarter Intel sees revenue of $10 billion to $10.6 billion. 

Johnson & Johnson (JNJ) posted an 8% rise in second-quarter earnings, topping Wall Street's estimates. The Dow component's adjusted-earnings rose to $1.18 per share on $16.45 billion in revenue. Analysts polled by Thomson Reuters had been looking for earnings of $1.12 on $16 billion in revenue. 

Wachovia (WB) closed in the red after it was downgraded to "underperform" by influential analyst Meredith Whitney. The Oppenheimer analyst cited diminished earnings outlook and a "bleak" forecast for shareholders. Whitney also sees Wachovia posting losses for each of the next two years. 

Sprint (S) soared more than 10% on a report that the telecom may be taken over by Souther Korea's SK Telecom in a friendly deal. If such a deal were completed, it would be the largest takeover of a U.S. company by a South Korea one, CNBC reported. The network's David Faber reported that the two sides are in talks and that any deal would be friendly in nature. 

Sun Microsystems (JAVA) surged in after-market trading on its bullish preliminary fourth-quarter results. The tech company sees adjusted-earnings of 25 cents to 35 cents a share, compared to mean analyst estimates of 25 cents. Sun Micro sees fourth-quarter revenue of $3.72 billion to $3.8 billion. 

Lehman Brothers (LEH) CEO Dick Fuld is reportedly seriously considering taking his investment bank private. The talks come as Lehman continues to be slammed by tons of market rumors that have helped push its stock down more than 75% year-to-date. Internal talks on privatizing Lehman have gotten very serious, the New York Post reported. Shares of Lehman soared more than 10%, outperforming the rest of the financial sector. 

Proctor & Gamble (PG) affirmed its fourth-quarter outlook. The company said it still expects earnings of 76 cents to 78 cents a share on sales growth of 8% to 10%. Analysts polled by Thomson Reuters are looking for 78 cents on $21 billion in revenue. 

AIG (AIG) was the worst-performing stock on the Dow after the insurance giant was downgraded to “market perform” from “outperform” by Wachovia. The bank also lowered its earnings estimates for AIG for the next two years.

Genentech (DNA) jumped after the biotech company raised its 2008 outlook. The company now sees full-year earnings of $3.40 to $3.50 a share, up from $3.35 to $3.40. However, Genentech’s adjusted-earnings in the second quarter missed estimates, coming in at 82 cents a share. Analysts polled by Thomson Reuters had been looking for 86 cents a share.

Data Dump

The day's economic data failed to lift Wall Street's spirts.

The government said producer prices jumped by a larger-than-expected 1.8% last month -- the largest one-month increase since November. From a year ago, producer prices have soared by 9.2%, the largest one-year rise since June 1981. Excluding food and energy, producer prices increased by only 0.2%, slightly less than expectations. 

Also, the Commerce Department said retail sales increased by just 0.1% in June, compared to estimates for a 0.5% rise. Excluding autos, retail sales rose by 0.8%. 

World Markets

European stocks were deeply in the red late on Tuesday. The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, fell 73.51 points, or 2.29%, to 3142.73. The FTSE 100, London's benchmark index, lost 128.50 points, or 2.42%, to 5171.90.

On the continent, Paris's CAC 40 Index dropped 81.38 points, or 1.96%, to 4061.15 while Germany's DAX declined 118.55 points, or 1.91%, to 6081.70.

In Asia, Japan's benchmark Nikkei 225 Index fell 255.60 points, or 1.96%, to 12754.56. Hong Kong's Hang Seng declined 839.69 points, or 3.81%, to 21174.77.