U.S. STOCKS - Inflation worries spur sell-off on Wall Street

By Kristina Cooke

NEW YORK (Reuters) - U.S. stocks slid on Tuesday after oil prices jumped above $129 a barrel and a key inflation gauge rose more than expected, adding to concerns that Americans will have less to spend.

Slack quarterly earnings from two of the biggest U.S. retailers, Target Corp and Home Depot Inc, underscored how consumers are struggling as gasoline prices soar and home values drop.

Bank shares were the biggest drags on the S&P 500 and the Dow after an influential analyst warned that the credit crisis was far from over. JPMorgan Chase & Co fell almost 5 percent. An index of S&P financials closed at its lowest level in a month.

The tone was set early in the session, after the U.S. Producer Price Index, excluding volatile food and energy costs, rose at the fastest since 1991 for the year through April.

"The pullback on some concerns about inflation and higher oil is not all that surprising after last week's gains," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati.

But as in last week's rally, volume was also thin on the way down.

The Dow Jones industrial average fell 199.48 points, to 1.53 percent, to 12,828.68. The Standard & Poor's 500 Index slid 13.23 points, or 0.93 percent, at 1,413.40, while the Nasdaq Composite Index ended down 23.83 points, or 0.95 percent, to 2,492.26.

Meredith Whitney, banking analyst at Oppenheimer & Co, said the credit crisis will result in three years of multibillion-dollar revenue declines for banks.