Wall Street fell sharply today for a second straight session after a hefty jump in wholesale inflation and a drop in new-home construction...

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NEW YORK — Wall Street fell sharply today for a second straight session after a hefty jump in wholesale inflation and a drop in new-home construction gave investors more reason to believe an economic recovery is far off.

The Dow Jones industrial average fell 130.84 to 11,348.55.

Microsoft, one of the 30 Dow stocks, slipped 22 cents to $27.32. Boeing, another Dow stock, was down 69 cents to $62.95.

The Standard & Poor’s 500 index fell 11.90 to 1,266.70, and the Nasdaq composite index fell 32.62 to 2,384.36.

The Labor Department said its Producer Price Index rose by 1.2 percent in July, more than double the expected rate, and lifting the current annual rate to the loftiest level in 27 years. Even after stripping out food and energy, core prices rose by a higher-than-expected 0.7 percent, the biggest increase since November 2006.

“Maybe investors were hoping to shrug off the challenges of high commodity prices and inflation,” said Jack Ablin, chief investment officer at Harris Private Bank. “But now we find out that perhaps the inflation situation is worse than we thought.”

A rebound in oil prices added to investors’ anxiety, which had abated slightly in recent weeks as crude tumbled from its July record above $147 a barrel to three-month lows.

The Commerce Department added to the heap of downbeat news today, reporting that July housing starts fell to an annual rate of 965,000 units — higher than analysts predicted, but the lowest level in more than 17 years nonetheless.

And the financial sector took another hit after a JPMorgan Chase & Co. analyst estimated that Lehman Brothers Holding will have to write down its investments during the third quarter by $4 billion, and a Goldman Sachs analyst advised against buying the stock of American International Group Inc.

With the nation’s financial institutions low on available cash due to their poor investments in the mortgage markets, consumers and businesses are having a harder time getting loans — another hindrance for the economy.

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