Investors worried that disappointing news from consumer retailers and manufacturers, including Maytag Corp. and Costco Wholesale Corp., spelled a cutback in consumer spending that could derail a steady flow of profits for corporate America. Rising oil prices — seen as a tax on consumers — added to the negativity.

But stocks held to modest losses for most of the session, until The Wall Street Journal reported that the United States believed North Korea was preparing for a nuclear weapons test. At that point, the major indexes plunged and investors cashed out despite the previous session's gains, which were the best in two years.

"It's like we keep getting another monkey wrench thrown in, and we're just so quick to sell off on any bit of bad news," said Bill Groenveld, head trader at vFinance Investments. "There's definitely some questionable sentiment here, but if we can get back to having decent earnings, and no more shockers like this Korea thing, we could start getting past this and move higher."

According to preliminary calculations, the Dow Jones industrial average fell 60.89, or 0.6 percent, to 10,157.71. Despite gaining 206 points yesterday, the Dow has seen six losing days, including four 100-point losses, in the last eight sessions.

Broader stock indicators also fell substantially. The Standard & Poor's 500 index was down 7.83, or 0.7 percent, at 1,152.12. The Nasdaq composite index lost 30.22, or 1.5 percent, to 1,932.19.

The market flailed wildly over the last eight sessions, with the Dow losing 374 points last week, Much of the selling was attributed to fears about inflation, which were exacerbated by the Labor Department's report on consumer prices last week, and underscored by the Federal Reserve's "Beige Book" survey — not generally considered a compelling data point. Analysts said the recent trading underscores the depth of investors' anxiety, even in the face of generally positive earnings news.

"It's a really strange period of market action. There's no conviction," John Caldwell, chief investment strategist for McDonald Financial Group in Cleveland. "That's why people are grasping at second- and third-level economic data, and rumors about geopolitical issues. ... Bond yields are all over the place, oil trades like it's a tech stock in 1999 ... Investors are nervous."

But yesterday's strong rally nonetheless made for Wall Street's second winning week in the last three. For the week, the Dow rose 0.7, the S&P gained 0.83 percent, and the Nasdaq added 1.26 percent.

Adding to the concern over consumer spending, oil prices continued their rise, with a barrel of light crude settling at $55.39, up $1.319, on the New York Mercantile Exchange.

The bond market rallied after yesterday's sell-off, with the yield on the 10-year Treasury note falling to 4.25 percent from 4.30 percent late yesterday. The dollar was mixed against other major currencies, while gold prices were higher.

The Nasdaq Stock Market Inc. was up 26.1 percent, or $2.78, at $13.43, after announcing plans to purchase Instinet Group Inc.'s electronic trading network, a move designed to improve Nasdaq's position as competition grows among the world's stock markets. Instinet skidded 51 cents to $5.19.

Google surged 5.7 percent, or $11.59, to $215.81, as it continued to pleasantly surprise investors with its latest earnings report. The online search company surpassed Wall Street profit forecast by 37 cents per share in the first quarter, and the stock reached a new high in the first minutes of trading.

Euphoria over Google was overshadowed, however, by earnings gloom from the consumer sector. Costco warned that gasoline sales were eroding its margins despite steady sales in other areas. Costco slid 8.8 percent, or $3.85, to $40.17.

Slower sales have forced Maytag to ramp up its cost-cutting plans. The appliance maker plunged 27.9 percent, or $4.21, to $10.89, after reporting a steep slide in first quarter profits, missing Wall Street profit forecasts by 10 cents per share. Maytag also reduced its earnings forecasts for the year.

Eastman Kodak Co. also saw a rough quarter as the world's biggest film producer continued on its bumpy transition to digital imaging and photography. The company swung to a loss for the quarter and missed analysts' forecasts by 30 cents per share after one-time charges. Kodak tumbled 9.4 percent, or $2.85, to $27.66.

In other merger news, MCI Inc. climbed 19 cents to $26.69 after Qwest Communications International Inc. continued its tenacious pursuit of its rival, upping its bid to $30 per share, or $9.7 billion. MCI had already agreed to a $23.10 per share, or $7.6 billion, bid from Verizon Communications Inc. Qwest shed 6 cents to $3.55, while Verizon was down 20 cents at $34.06.

Declining issues outnumbered advancers by nearly 5 to 2 on the New York Stock Exchange, where volume came to 1.68 billion shares, compared with 1.83 billion traded yesterday.

The Russell 2000 index of smaller companies was down 9.45, or 1.6 percent, at 589.53.