Wall Street sank for a second straight session Tuesday after Federal Reserve Chairman Ben Bernanke said the slumping housing market remains a "significant drag" on the economy.Bernanke's speech Monday night at the New York Economic Club elevated concerns that the summer credit crisis might persist into the winter — a sobering thought for investors, who are sifting through mixed third-quarter earnings and watching energy costs rise. "First of all, the worry is we're getting more bad news on housing. Number two is higher oil prices. That's a pretty bad combination," said Hugh Johnson, chief investment officer of Johnson Illington Advisors.

Crude oil prices briefly spiked to a record above $88 a barrel Tuesday, and a National Association of Home Builders' index that tracks developers' expectations of future home sales fell for the eighth straight month to the lowest point since January 1985.



Johnson added: "Of particular concern were the comments by Bernanke. That sort of injected a fairly high level of uncertainty into the economic and earnings outlook. That comes at a time when earnings results are not particularly exciting — in fact, are dismal."

The Dow Jones industrial average and the Standard & Poor's 500 index posted their biggest point drops in five weeks Monday, after Citigroup Inc. reported a steep third-quarter profit decline and announced plans with a consortium of banks to set up a fund to help bail out the credit markets.

Then Tuesday, Wells Fargo & Co. shares fell more than 3 percent after the bank said third-quarter earnings increased less than analysts anticipated and that it boosted loan loss reserves in anticipation of further problems in consumer credit. KeyCorp shares declined more than 5 percent after the Midwest regional bank posted a 33 percent drop in third-quarter profit.

In early afternoon trading, the Dow fell 75.03, or 0.54 percent, to 13,909.77.

Broader indicators also fell. The S&P 500 index slid 8.73, or 0.56 percent, to 1,539.98, and the Nasdaq composite index dipped 10.87, or 0.39 percent, to 2,769.18.

Bond prices rose as investors pulled money out of stocks, and the yield on the 10-year Treasury note fell to 4.64 percent from 4.68 percent at Monday's close. Bond prices and yields move in opposite directions. The dollar rose against most currencies, and gold prices slipped.

On Tuesday, Treasury Secretary Henry Paulson echoed Bernanke's sentiments, saying the housing market is a signficant risk to the economy. Bernanke had said Monday the deepening housing slump will probably drag on economic growth.

Still, Bernanke again pledged to "act as needed" to help financial markets that were sent reeling this summer, and said inflation remains in check. That could be a key factor for policymakers when deciding whether to cut interest rates for the second month in a row at their Oct. 30-31 meeting.

But while core inflation — which excludes volatile food and energy prices — is mild, oil prices are pushing further into record territory on speculation about supply disruptions.

Crude futures rose $1.54 to $87.67 a barrel on the New York Mercantile Exchange, after briefly surpassing $88.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange. Volume came to 648.7 million shares.

Overseas, Japan's Nikkei stock average fell 1.27 percent and Hong Kong's Hang Seng index fell 1.98 percent. Britain's FTSE 100 fell 0.45 percent, Germany's DAX index fell 0.09 percent, and France's CAC-40 fell 0.57 percent.

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