Alcoa (AA), Bank of America (BAC), JPMorgan, Delta Air Lines (DAL), United Continental (UAL), AMR (AMR), Southwest Airlines (LUV) All Drop on Down Trading Day

The Dow Jones Industrial Average fell more than than 180 points, led by Alcoa (AA), Bank of America (BAC), and JPMorgan (JPM). The plunge follows three weeks of gains for the Dow, which reached its highest level since June 5, 2008.

Kraft (KFT) and Chevron (CVX) were among the only gainers on the blue-chip index.

The S&P 500 fell more than 2.2 percent, while the tech-heavy Nasdaq sank nearly 3 percent after both indices posted three straight weeks of gains and ended last week at new multi-year highs. The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared more than 24 percent to above 20.

All key S&P 500 sectors remained lower, led by materials, financials, and industrials.

At mid-morning, Libya declined a "force majeure" on exports of oil products, and blocked imports, according to Reuters, citing trade sources. Force majeure is a common contract clause that frees both parties from fulfilling their obligations when an extraordinary event occurs.

"Clearly the jitters in the Middle East have taken the forefront today," Ryan Detrick, senior technical analyst at Schaeffer's Investment Research, told CNBC.com.

But Detrick said the underlying news on the economy and corporate earnings remains strong, and most likely, buyers will continue to emerge if the Middle East concerns ease.

"That’s why you want to side with the bulls," Detrick said. "I wouldn’t hit the eject button here."

That could change, however, if there were several consecutive days of selling, he said.

Oil prices rose to 2.5-year highs above $92 a barrel as Libyan production fell amid violence in the country. Investors are concerned the revolt in Libya could spread to other major oil producers in the Middle East and North Africa, crippling supplies.

Oil companies, however, gained on soaring oil prices. More than 60 percent of all domestic and international oil producers edged higher, including Chevron and ExxonMobil (XOM).

But oil refineries—which will see higher input costs if prices remain high—suffered, including Valero Energy (VAL), Hess (HES) and Marathon Oil (MRO).

And airlines were hard hit by rising oil prices, as most major carriers sank, including Delta Air Lines (DAL), United Continental (UAL), AMR (AMR), Southwest Airlines (LUV) and US Airways.

Saudi Arabia’s deputy oil minister tried to calm investors’ nerves, telling CNBC the country will not allow any supply disruptions from the Middle East to impact global supplies of oil.

But the head of the IEA said higher oil prices posed a threat to the global economic recovery, warning that if oil prices stay at $100 per barrel or above this year it would be as much of a burden as high oil prices were for the world economy in 2008.

The unrest in Egypt kept gold at lofty levels of more than $1,400 an ounce. The dollar (.DXY), meanwhile, traded relatively flat against a basket of currencies.

The tech-heavy Nasdaq plunged as investors fled highly liquid technology names, including Nvida (NVDA), MEMC Electronic Materials (WFR), Micron (MU) and Applied Materials (AMAT), according to Dave Rovelli, managing director of equity trading at Canaccord Genuity.

Financials were also hit by investors who move quickly in-and-out of these stocks, including Citigroup (C), Bank of America and JPMorgan.

Bank of America shares also were hurt after news it was writing down goodwill for a credit card unit by $20 billion, which was more than investors had expected.

Among the day's earnings news, Home Depot (HD) was one of the few bright spots on the Dow after the home imrpovement retailer posted better-than-expected results. However, some analysts remained skeptical as S&P Equity lowered its rating on the firm to "sell" from "hold."

Macy's (M) gained after the department store chain reported higher profits on rising holiday sales. The firm expects sales and profits will continue to rise this year.

But Wal-Mart (WMT) sank, after posting its seventh straight quarterly drop in U.S. sales.

And Barnes & Noble (BKS) plunged more than 10 percent after the bookstore chain announced it would suspend its dividend, and didn't provide a final quarter outlook for its fiscal year because of the bankruptcy filing of rival Borders. In addition, S&P Equity cut its price target on Barnes & Noble to $19 from $21.

Hewlett Packard (HP) and Chesapeake Energy (CHK) were slated to post earnings after the bell tonight.

On the M&A front, BHP Billiton (BHP) said it plans to buy shale gas reserves from Chesapeake Energy (CHK) for $4.75 billion.

And Forest Laboratories (FRX) agreed to buy Clinical Data (CLDA) for $1.2 billion to add to its portfolio of drugs to treat depression.

In other corporate news, Apple (AAPL) shares declined following a report that the next version of the iPad tablet computer will be delayed is not true, according to a source familiar with the matter.

And Netflix (NFLX) sank after news that Amazon.com (AMZN) would offer a streaming TV and movie service to compete directly against NetFlix. The service will be available to Amazon's premium customers.

Dynegy (DYN) fell after news that billionaire investor Carl Icahn would not buy the power company, and that its chairman and CEO was stepping down.




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