Stocks fell sharply Thursday, with the Dow Jones average closing at a 2-month low, as crude prices spiked to a new record and Dow component American International Group Inc. (AIG) was hurt by New York Attorney General Eliot Spitzer's fraud charges against the insurance industry.

Detroit automaker General Motors Corp. (GM) also weighed on the blue-chip Dow after reporting lower-than-expected earnings, which sent its shares 6 percent lower.

Stocks have closed lower for five of the past six sessions.

The Dow Jones industrial average (searchended down 107.88 points, or 1.08 percent, at 9,894.45. The Standard & Poor's 500 Index (searchwas down 10.36 points, or 0.93 percent, at 1,103.29. The technology-laced Nasdaq Composite Index (searchwas down 17.51 points, or 0.91 percent, at 1,903.02.

Crude oil futures continued a record-setting trend Thursday, with prices reaching $54.90 per barrel in intraday trading. While crude inventories rose more than expected, according to a government report, reserves of distillates such as heating oil dropped substantially. A barrel of light crude for November delivery closed at a record $54.76, up $1.12, on the New York Mercantile Exchange (search).

"The biggest thing that would help the markets right now would be a sustained drop in crude oil, but I'm not holding my breath for that," said Lincoln Anderson, chief investment officer for LPL Financial Services in Boston. "It's drawing attention away from third-quarter numbers that, despite GM, are really pretty good."

The slide extended Wednesday's fall when a surge in oil prices knocked the Dow and the S&P 500 down 0.7 percent.

"Part of this is its earnings related, but it is also the announcement from Spitzer," said John Caldwell, chief investment strategist at McDonald Financial Group.

Spitzer sued Marsh & McLennan Cos. (MMC), accusing the insurance broker of steering clients to certain insurers in exchange for payments. The lawsuit, which alleged that the manipulation has been going on since the late 1990s, implicated other insurance companies, including blue-chip AIG, sending their shares sharply lower.

Among sharply declining insurance-related shares, AIG fell $6.99 to $60, while Marsh & McLennan, parent of mutual fund company Putnam Investments, fell 24 percent, down $11.28 to $34.85.

A raft of disappointing economic figures also figured to weigh heavily on the market. According to the Commerce Department (search), the nation's trade deficit climbed to $54 billion in August, the second-highest level in history and 6.9 percent higher than July. Furthermore, a weak dollar overseas contributed to a 2.9 percent increase in the price of imported goods in September.

The Labor Department (search) reported a larger-than-expected increase in first-time jobless claims last week, with claims rising 15,000 to 352,000. The four-week moving average of claims, seen as a more reliable indicator of unemployment, rose by 4,000 to a seven-month high of 352,000.

GM posted slightly stronger quarterly earnings, but the results were at the low end of its own forecast and the automaker cut its earnings outlook for the year due to slowing growth in China and mounting losses in Europe. Investors fear that the slower economy and soaring energy prices could lead other major companies into similar problems.

GM shares fell 6 percent, or $2.46, to $38.84.

Financial stocks fared much better, with Dow component Citigroup (C) surpassing Wall Street estimates by 3 cents per share and Bank of America Corp. (BAC) beating forecasts by a penny per share. Nonetheless, Citigroup slipped a penny to $44.10, while Bank of America fell 22 cents to $44.78.

A mix of news from technology companies pressured tech shares. Apple Computer Inc. (AAPL) surged $3.21 to $42.96 after it doubled its profits from a year ago due to strong sales of its iPod music players, beating Wall Street forecasts by 8 cents per share after one-time charges.

However, Morgan Stanley cut its rating on Hewlett-Packard Co. (HPQ) to "equal weight" from "overweight," citing the Dow component's loss of market share and increased competition. H-P was down 32 cents at $18.58.

Shares of cell phone maker Nokia Corp. (NOK) rose 27 cents to $14.24 after it said third-quarter earnings fell but that sales had picked up. Nokia forecast fourth-quarter earnings in line with Wall Street expectations.

UnitedHealth Group Inc. (UNH), the biggest U.S. health insurer, rose 3 percent or $2.11 to $74.10, helping the S&P 500, after it said quarterly profit rose 47 percent as it kept escalating medical costs under control.

The Russell 2000 index of smaller companies was down 4.54, or 0.8 percent, at 564.88.

Overseas, Japan's Nikkei stock average fell 1.44 percent. In Europe, Britain's FTSE 100 closed down 0.12 percent, France's CAC-40 lost 0.89 percent for the session and Germany's DAX index dropped 0.80 percent.

Reuters and the Associated Press contributed to this report.