Stocks sank for a second consecutive day in tandem with oil prices surging to 28-month highs as continued turmoil and violence in Libya shatters traders nerves.

Oil futures in New York closed at just under $99 per barrel (having reached the $100 level earlier in the day), the highest such close since October 2008. Oil production in OPEC member Libya has been disrupted by what appears to be a gathering civil war in that country.

The Dow Jones Industrial Average dropped 107.01 points, or 0.88 percent, to 12,105.78. The S&P 500 tumbled 8.04 points, or 0.61 percent, to 1,307.40. The NASDAQ composite slipped 33.43 points, or 1.21 percent, to 2,722.99.

Hewlett-Packard Co. (NYSE: HWP) plunged 9.62 percent, weighing on the tech sector, after the company issued a disappointing revenue forecast for the current fiscal year.

Oil companies, including Exxon Mobil Corp. (NYSE:XOM) and Chevron (NYSE: CVX) rose on higher crude prices.

Bond prices fell as the yield on the benchmark 10-year Treasury note climbed to 3.49 percent.