Stocks stumble on record oil, inflation worries

Target reported that profit dropped almost 8 percent on higher costs, but it beat expectations. Shares fell 63 cents to $54.29.

Staples said profit rose 1.5 percent during the quarter, and reaffirmed its outlook. Shares rose 4 cents to $23.61.

Banking stocks fell after Oppenheimer & Co. analyst Meredith Whitney said she expects the credit crisis to extend into 2009, and "perhaps beyond." She said firms like JPMorgan Chase & Co. and Citigroup Inc. have set aside $25 billion to cover losses, but might have to set aside about $170 billion by the end of next year.

Citi fell 88 cents, or 3.8 percent, to $22.11, and JPMorgan dropped $2.29, or 5 percent, to $43.70.

Declining issues led advancers by nearly 2 to 1 on the New York Stock Exchange. Consolidated volume came to 3.74 billion shares, up from 3.55 billion on Monday.

The Russell 2000 index of smaller companies fell 2.81, or 0.38 percent, to 735.64.

Overseas, Japan's central bank kept interest rates steady amid lingering worries about a global slowdown. Tokyo's Nikkei closed down 0.77 percent.

In Europe, London's FTSE dropped 2.90 percent, Frankfurt's DAX fell 1.49 percent and Paris' CAC 40 shed 1.70 percent.

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