NEW YORK — Wall Street plunged Thursday, pulling the Dow Jones industrial average down more than 360 points as investors found themselves confronted by two uncomfortable prospects: an end to interest rate cuts and a slowing economy.

Mindful of a warning from the Federal Reserve on Wednesday about inflation, the market nervously watched the price of oil, which passed $96 a barrel overnight for the first time before dipping on profit-taking. The Fed, which cut interest rates a quarter point Wednesday, said in a statement that inflation remained a concern, and oil's ascent to another record raised the possibility not only that the Fed might stop cutting rates, but that it might even consider raising them if inflation accelerates.

Meanwhile, Wall Street also had to contend with concerns about a slowing economy. A report from the Commerce Department indicated that consumers scaled back their spending in September as worries mounted about a worsening housing market and further credit market turmoil. And a trade group reported that manufacturing in the U.S. grew in October at its weakest pace since March.

The combination of factors led investors to pull back sharply from Wednesday's rally, in which the Dow climbed 137 points after the Fed said the economy had weathered the summer's credit crisis.

"Wall Street is in love with the idea of a rate cut and realized that the Fed said inflation is still a concern; that lowered the chances of a cut in December," said Ryan Detrick, a strategist with Schaeffer's Investment Research. "We're now feeling the pain now that investors have slept on it and figured out what they said."

Christopher Cordaro, chief investment officer at RegentAtlantic Capital, said Wall Street remains anxious about the possibility of recession. He also believes the market doesn't have enough positive news "to have any type of sustained rally."

Investors were unswayed when the Fed pumped $41 billion into the U.S. financial system, one of its largest cash infusions since the credit crisis began in the summer. This increases the amount of money banks have to lend and helps improve liquidity. In the past, such an action helped soothe the market, but that was not the case Thursday.

With the market growing pessimistic about the economy, the Labor Department's report on October jobs creation, scheduled to be released this morning, will be taking on even more importance than it usually has. The data is expected to show unemployment remained steady in October, with payroll growth of 85,000 new jobs, compared with 110,000 in September.

The Dow fell 362.14, or 2.60 percent, to 13,567.87.

"We've been getting all these mixed signals, and this is just a confluence of bad news between the Fed, the financials and this mixed earnings season," said Chris Johnson, president of Johnson Research Group.

Financial stocks were pummeled after Citigroup Inc. and Bank of America Corp., the two biggest U.S. banks, were downgraded by CIBC World Markets on worries about the credit markets. Bank of America, the No. 2 U.S. bank, dropped $2.57, or 5.3 percent, to $45.71. Citi, the nation's largest financial institution, dropped $2.85, or 6.9 percent, to $38.51, its lowest level in four years.

The Commerce Department's report that consumer spending rose by 0.3 percent in September, slightly lower than the 0.4 percent increase that analysts expected, raised concerns about a slowing economy.

In addition, the performance of the manufacturing sector in October suggested that ongoing troubles in the housing and credit markets have seeped into the industrial sector.

Wall Street was also troubled by the day's corporate news. Exxon Mobil Corp., the world's largest publicly traded oil company, reported that its third-quarter profit fell 10 percent because of lower refining and chemical margins. Shares dropped $3.49, or 3.8 percent, to $88.50.