NEW YORK (AP) - Stocks had their worst two-day pullback in six months after clashes in Libya sent oil prices to two-year highs and Hewlett-Packard said its revenue growth was slowing.
Forces loyal to Libyan leader Moammar Gadhafi continued to fight with anti-government demonstrators, leading to widespread chaos and shooting in the streets of the Libyan capital, Tripoli. Nearly 300 people have been killed, according to the New York-based Human Rights Watch.
The unrest sent oil up 2.8 percent to $98 a barrel Wednesday, its highest price since October 2008. Libya is the world's 15th largest exporter of crude, accounting for 2 percent of global daily output. Traders are worried the revolt could threaten Libya's oil production and spread to other countries in the region.
"We're at a point where the market is concerned over this series of dominoes in the Middle East and wonders if there's another country that's next to fall," said David Katz, a portfolio strategist for Weiser Capital Management.
Oil companies benefited from the higher crude prices. Chevron Corp. was the biggest gainer in the Dow average, rising 1.9 percent. Exxon Mobil Corp also gained 1.9 percent. Energy companies in the Standard & Poor's 500 index rose 2 percent, the only gain among its 10 company groups.
The Dow Jones industrial average lost 107.01 points, or 0.9 percent, to 12,105.78. The Dow has fallen 285.47 points, or 2.3 percent, over the last two days. It was the largest drop since August 12.
The S&P 500 fell 8.04, or 0.6 percent, to 1,307.40. The Nasdaq composite fell 33.43, or 1.2 percent, to 2,722.99.
Each major index has gained more than 10 percent over the last three months, leading some analysts to say that the situation in Libya is giving traders an opportunity to sell and lock in profits after the market's recent run-up.
The market's two-day stumble is only its second significant decline this year. The other came on Jan. 28, when protests in Egypt escalated.