The bears appear to be back at the helm on Wall Street. Thanks to a $4 surge in oil prices and a new, gloomier outlook from the Fed, the Dow plunged 200 points on Wednesday -- its second 200-point selloff in a row. 

Today's Market

The Dow Jones Industrial Average fell 227.49 points, or 1.77% to 12601.19, the Standard & Poor’s 500 index dropped 22.69 points, or 1.61%, to 1390.71 and the Nasdaq Composite Index lost 43.99 points, or 1.77%, to 2448.27. The consumer-friendly Fox 50 fell 16.15 points, or 1.63%, to 977.03.

There was no shortage of big losers on the blue-chip index on Wednesday, with Boeing (BA) falling 4.6% and Citigroup (C) sliding even further. Even energy giants Chevron (CVX) and ExxonMobil (XOM) were unable to hold onto gains that were fueled by the oil prices. 

The Nasdaq Composite lost nearly 2% of its value, extending its losing streak to four. United Airlines (UAUA) led the decliners on the Nasdaq 100, losing more than a quarter of its value and falling to a record low on fuel concerns and analyst downgrades. On the upside, Intuit (INTU) led the index, picking up 2.9% after it reported quarterly results. 

Consecutive triple-digit plunges for the stock market has renewed bearish sentiment on Wall Street. The bears had been kept on the sideline until this week as traders had earlier expressed optimism that the worst of the credit crisis and the slide in stock prices was over.

"Two days ago I couldn’t have been more positive about the direction the market was going...But I guess we just didn’t read the tea leaves. We should have seen this coming," Ted Weisberg of Seaport Securities told FOX Business. 

The stock market hit the lowest levels of the day after the Federal Open Market Committee released minutes from its most recent meeting, which revealed the decision to lower rates last month was a "close call." More importantly, the Fed reduced its prediction for economic growth and raised its expectations for inflation as well as unemployment. The Fed now sees GDP increasing just 0.3% to 1.2% in 2008, lower than its previous forecast of a 1.3% to a 2% increase. 

“The bottom line is they really didn’t say anything encouraging about the economy in the second half. I think a lot of folks, myself included, were looking for some improvement in the second half," Weisberg said. 

The minutes appear to reflect a shift in the central bank's thinking, focusing more on inflation fears and less on an economy that needed encouragement from interest rate reductions. The Fed meets again in late June and expectations are that the central bank will hold rates steady rather than risk fueling inflation by cutting them once again. 

Without any major economic reports released on Wednesday, much of the focus on Wall Street remained on a huge $4 surge in crude oil prices. Crude prices soared past the psychologically-important $130 threshold, to close at $133.17 a barrel, up $4.19 on the day.

As if they needed any help at all, oil prices spiked higher after the Department of Energy reported a huge 5.4 million barrel decrease in stockpiles for last week. The report was very bullish, especially considering the market had expected a modest 700,000 barrel increase.  

“I think everybody is really paying very close attention to [oil]. That discretionary income is certainly being affected," said Anthony Conroy, head trader at BNY ConvergEx. 

The weakening dollar has been a catalyst for crude's rally over the past two days. The dollar slid to a fresh four-week low against the Euro and a one-week low against the Yen following the FOMC minutes. 

No industry group has been wounded by the record oil prices as much as the airlines. The group took a dive on Wednesday, falling 12% on the fuel concerns, a key analyst downgrade and a domestic capacity reduction by American Airlines (AMR). 

Influential Soleil Solesbury Research analyst James Higgins slashed the sector's rating to "Neutral" from "Outperform" on Wednesday thanks to the "relentless fuel price rise." Airlines from Alaska Air (ALK) to JetBlue (JBLU) took big hits on the news.

Meanwhile, financial stocks continued to tumble, falling a collective 2.9% a day after influential Oppenheimer analyst Meredith Whitney warned that Wall Street has not yet seen the worst of the credit crisis. Lehman Brothers (LEH) took the brunt of the damage on Wednesday, sliding almost 6% after a pair of analysts significantly lowered their profit forecasts on the company. 

At the start of the week the Dow had crossed over the pivotal 13,000 mark but has now slid well below that threshold. “I think we are stuck in that trading range between 12,000 and 13,000. Until we figure something out that’s where we are going to stay," said Conroy. 

Corporate Movers

American Airlines parent AMR Corp. (AMR) plunged 24% to a level unseen since 2004 after it said it plans to cut back on domestic flights, retire ground aircraft, lay off workers and tag on additional fees to passengers to help the airlines deal with the soaring cost of oil. AMR said it is aiming to reduce capacity by 11-12% from a year ago and would retire 75 fuel inefficient aircraft. American had previously expected fourth-quarter capacity to fall 4.6 percent from the same period in 2007. The airline will start charging passengers after June 15 a $15 fee for the first checked bag on all American and American Eagle flights.

Time Warner (TWX) and cable television arm Time Warner Cable (TWC) revealed new details in their plans to separate into two independent companies. As part of the deal, Time Warner Cable will pay a  $10.9 billion one-time dividend to shareholders. Shares of Time Warner were flat while TWC picked up 3.5%. 

BJ’s Wholesale Club (BJ) declined 3% even after it beat the Street with a 26% jump in first-quarter earnings and also boosted its full-year profit forecast. BJ’s earned 29 cents per share, topping expectations by 1 cent. However, the discount warehouse club reported a 12% rise in sales to $2.26 billion, compared to estimates from Thomson Reuters for $2.27 billion. BJ’s new forecast for 2008 of $2.04 to $2.14 per share is above average estimates of $2.06 per share.

Barnes & Noble (BKS) is considering a deal to acquire rival Borders (BGP), which put itself up for sale in March, The Wall Street Journal reported. Shares of Borders soared 8.8%. However, a deal would likely face regulatory obstacles as the combined market share of two book chains is estimated at 30% to 34% of the market, the newspaper reported. While a deal would likely help increase savings and profits for Barnes & Noble, the company is concerned about existing stores already located close to Borders locations, the Journal reported.

Microsoft (MSFT) introduced a new cash-back incentive to get people to use its Live Search service. The move is part of Microsoft's attempts to catch up to Yahoo (YHOO) and market leader Google (GOOG). As a part of the plan, Microsoft will give customers cash back for buying certain products found on Live Search. Partners for the plan include eBay (EBAY), Sears (SHLD) and Overstock.com. 

Talbots (TLB) disclosed a 69% plunge in first-quarter profit on restructuring charges but posted adjusted-earnings that beat expectations. Shares of Talbots jumped 5.9%. The apparel retailer’s adjusted- earnings of 21 cents per share, which remove a 7 cent per share restructuring hit, topped estimates of 12 cents per share, according to Thomson Reuters. However, Talbots’ 5% decline in revenue to $542.4 million missed estimates for $546.5 million.

Goldman Sachs (GS), Boston Properties (BXP) and other investors are considering making a bid to buy the General Motors building on Fifth Avenue in Manhattan for $2.8 billion, The Wall Street Journal reported. The building is owned by New York developer Harry Macklowe. A $2.8 billion price tag would make it the most expensive office builder ever sold.

World Market

The Dow Jones Euro Stoxx 50 Index, a gauge of the 50 biggest companies in Europe, fell 28.18 points, or 0.74%, to 3794.13. The FTSE 100, London's benchmark index, rose 6.50 points, or 0.10%, to 6198.10. 

On the continent, Paris's CAC 40 Index fell 27.33 points, or 0.54%, to 5027.55 while Germany's DAX fell 77.67 points, or 1.09%, to 7040.83. 

In Asia, Tokyo's Nikkei 225 Index fell 233.79 points to 13926.30. Hong Kong's Hang Seng Index gained 290.83 points to 25460.29.