While major indexes gained yesterday when the storm weakened, Wall Street's spirits sank today after the nation's top disaster relief official called the hurricane "catastrophic," oil prices climbed and stocks in affected sectors continued to drop. The Dow Jones industrial average was down more than 100 points in late afternoon trading, but narrowed its losses toward the close.

"This is the kind of reaction everyone expected yesterday," said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp.

Crude oil futures hit record highs on fears that already tight refinery capacity would be further constrained as TV reports asserted widespread refinery shutdowns along the Gulf Coast and the Coast Guard said seven rigs are adrift in the Gulf of Mexico. A barrel of light crude settled at $69.81, up $2.61 a barrel on the New York Mercantile Exchange.

Notes released from the Federal Reserve's last policy maker meeting further aggravated equity investors. The notes signaled that rate hikes could continue into 2006 and said inflation had "ticked up" since the policy makers' previous meeting but indicated they decided not to accelerate the pace of short-term interest rate hikes "for now."

The Dow closed down 50.23, or 0.48 percent, at 10,412.82.

Broader stock indicators also dropped. The Standard & Poor's 500 index fell 3.87, or 0.32 percent, to 1,208.41, and the Nasdaq composite index fell 7.89, or 0.37 percent, to 2,129.76.

The U.S. dollar was mixed against other major currencies in European trading. Gold prices were lower.

Bonds soared on higher oil prices, the Fed's notes and stocks' declines, with the yield on the 10-year Treasury note down to 4.10 percent from 4.17 percent late yesterday.

New Orleans is an important coffee port; coffee prices were sharply higher on commodities markets. Prices for other commodities, including cotton and soybeans, also rose as the storm headed toward farmers in the Ohio Valley.

Natural gas prices climbed as companies with a Gulf Coast presence said they had either shut down or cut back operations there and disruptions could continue through Thursday. The increases in energy costs and commodity prices sparked inflation fears.

"Seventy dollar oil is the point where you start to get a bit more nervous," said Ed Keon, chief investment strategist with Prudential Equity Group in New York. He said oil and refinery companies were likely to "invest like crazy" to increase supply, while consumers and companies started using less energy to reduce demand.

"My guess is eventually we'll see prices start to come down again, but I don't know that anyone knows when we'll see that happen," he said.

Insurance stocks sagged again as damage estimates varied widely. Hartford Financial Services Group fell 19 cents to $73.15; Allstate Corp. fell 54 cents to $56.64 and MetLife Inc. fell 43 cents to $48.69.

The already troubled airline sector, which has been buffeted by labor troubles, pension costs and high oil prices, drooped. AMR Corp. fell 71 cents to $12.69; Northwest Airlines Corp. fell 25 cents to $4.94 and Delta Air Lines fell 7 cents to $1.20.

Oil companies continued to trade higher. Chevron Corp. rose $1.03 to $60.54; ConocoPhillips rose $1.34 to $64.41. Valero Energy Corp. rose $4.91 to $96.79 after shareholders of Premcor Inc., one of the nation's largest independent refiners, agreed to Premcor's purchase by Valero. Premcor fell $8.32 to $73.29 before trading was halted while the final shareholder vote was tallied.

Some gaming stocks fell again as casino operators assessed the damage to their Gulf Coast properties, which included reports of some casinos being swamped with water to the third floor. Pinnacle Entertainment Inc. fell 72 cents to $21.35. Isle of Capri Casinos Inc. fell 65 cents to $22.87.

Wal-Mart Stores Inc. fell 46 cents to $45.19 after it said 123 of its 3,725 stores were closed by the hurricane. Investors also feared higher gasoline prices could curtail shoppers' spending.

Other retail stocks also slid after the International Council of Shopping Centers said sales fell for the fourth straight week. Retailers report August sales on Thursday and the market is not optimistic. J.C. Penney Co. Inc. fell $1.82 to $48.66 and Target Corp. slipped $1.58 to $54.14.

In company news, labor leaders said Boeing Co. and the Machinists union remain far apart just days before the Machinists' contract is to expire on Friday. Boeing fell 84 cents to $66.74 after labor leaders warned of a possible strike at the Chicago plane manufacturer. Boeing submitted a revised offer to the union late yesterday that increases payments to workers but that union leaders said did not do enough to address key issues.

Abercrombie & Fitch Co. fell $3.93 to $53.80 after it said President and Chief Operating Officer Robert S. Singer is leaving after only 15 months on the job, due to a difference in approach over the teen retailer's plans for international expansion. The company reaffirmed its guidance for full-year income between $3.10 and $3.30 per share on projected sales of about $2.7 billion, including a one-time charge recorded in the third quarter related to Singer's severance package.

Ford Motor Co. fell 2 cents to $9.75 after the company said it plans to fire 400 U.S. salaried employees by the end of this year as part of a restructuring plan, the first time in 30 years that Ford has forced out so many white-collar workers.

Declining issues outnumbered advancers by more than 9 to 7 on the New York Stock Exchange, where preliminary consolidated volume was 1.90 billion shares, up from 1.59 billion at the same time yesterday.

The Russell 2000 index of smaller companies fell 1.56, or 0.24 percent, to 653.76.

Overseas, Japan's Nikkei stock average rose 1.16 percent. Britain's FTSE 100 rose 0.53 percent, Germany's DAX index fell 0.43 percent, and France's CAC-40 fell 0.11 percent.