Wall Street stocks tumbled on Wednesday as crude oil prices soared to fresh record peaks over 123 dollars a barrel, renewing jitters about inflationary pressures.

Rising oil prices could hamper US economic growth by pressuring consumers and the profit margins of trucking firms, airlines and other companies that are heavily reliant on fuel supplies, traders said.

The Dow Jones Industrial Average of blue chips closed down 206.48 points (1.59 percent) at 12 814.35, as the Dow slipped back under 13 000 points.

The technology-laden Nasdaq composite finished down 44.82 points (1.80 percent) at 2438.49 while the broad-market Standard & Poor's 500 index dropped 25.69 points (1.81 percent) to a close of 1392.57.

Stocks swooned as oil prices rocketed. New York's main oil futures contract, light sweet crude for June delivery, closed at a record 123.53 dollars a barrel after striking an intra day trading peak of 123.80 dollars.

The contract leapt 1.69 dollars compared with Tuesday's close.

Some economists fear that surging oil prices could crimp US economic growth, America is the world's biggest oil importer, which has been threatened by a long-running housing market slump and a related credit squeeze.

Analysts feared a strong rise in crude as predicted by some could hurt both US and global prospects.

"A super-super spike"

"A super-super spike would most likely put a stake in the heart of global economic growth," said Ed Yardeni at Yardeni Research.

On the corporate front, telecom giant Sprint Nextel and Clearwire announced a major bet on emerging WiMax wireless Internet technology.

Sprint Nextel and Clearwire said they would combine their networks in a new company with investment backing from Internet search giant Google, Intel and others. The firms have agreed to collectively invest $3.2-billion in the new company.

The venture marks a major wager on WiMax which offers computer users a much broader wireless range than already popular Wi-Fi technology.

Sprint Nextel's shares closed down 0.3 percent at 9.16 dollars.

In other stock action, the Walt Disney Company's shares ended up 2.9 percent at 34.70 dollars a day after the entertainment and media giant said its second-quarter net income had surged 22 percent to $1.1-billion.

The government meanwhile reported that first-quarter labour productivity — which tracks workers' output — at an accelerated 2.2 percent on an annualized basis compared with a revised 1.8 percent in the prior quarter.

"American workers, you just got to love them. They just seem to produce more and more and more. That was the case in the first quarter of the year as fewer workers working fewer hours managed to produce more," said Joel Naroff, the president of Naroff Economic Advisors.

Bond prices rose as the yield on the 10-year US Treasury bond fell to 3.867 percent from 3.893 percent on Tuesday while that on the 30-year bond declined to 4.622 percent against 4.642 percent.

Bond yields and prices move in opposite directions.

European investors had a better day than their US counterparts. London's FTSE 100 index closed up 0.74 percent at 6261.00 points. In Paris, the Cac rose to 5075.31 points and in Frankfurt the Dax gained to 7076.25 points.

AFP