New York ? A nearly 6 percent spike in crude oil prices sent stocks plunging Tuesday, as investors already concerned about rising prices and inflation envisioned a repeat of last summer’s selloff on Wall Street. The Dow Jones industrial average dropped 174 points, its biggest point drop since mid-2003.

Weakness in the dollar — which fell sharply against the Japanese yen and lost ground against other currencies — helped send crude futures soaring past $51 per barrel, much as they did during the third quarter last year, when the major stock indexes fell to multiyear lows. A barrel of light crude settled at $51.15, up $2.80, on the New York Mercantile Exchange.

The surge in crude futures sparked fears that the stock market would tumble further. That overshadowed strong earnings from Dow component Home Depot Inc. and intensifying merger talks between Federated Department Stores Inc. and May Department Stores Co.

“This distressing news about oil prices is really nagging at investors,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “It’s not enough to break the camel’s back, but that pressure will be there for a while.”

The Dow fell 174.02, or 1.61 percent, to 10,611.20, its lowest close since Feb. 3. It also was the biggest one-day point drop for the Dow since May 19, 2003.

Broader stock indicators also fell substantially. The Standard & Poor’s 500 index was down 17.43, or 1.45 percent, at 1,184.16, its lowest level since Jan. 31, and the Nasdaq composite index dropped 28.30, or 1.37 percent, to 2,030.32, its worst close since Jan. 25.

The Conference Board reported that consumer confidence fell slightly in February, hurt by January’s losses on the stock market, continued high energy prices and slow job growth. The independent research group’s confidence index fell to 104 from a revised 105.1 in January.

The dollar’s drop was a negative for oil prices, since most major transactions are conducted in dollars, and foreign oil producers must charge more in order to make up for the falling value of the greenback. The sharp hike in oil prices took many in the market by surprise, especially with OPEC maintaining production levels and a relatively mild winter in the United States.

Traders work in the crude oil futures pit at the New York Mercantile Exchange. Crude oil reached 1 a barrel during trading Tuesday.

The dollar also pushed bond prices slightly lower, with the yield on the 10-year Treasury note rising to 4.29 percent. Gold prices rose as investors hedged against the dollar’s losses.

And after last week’s jump in wholesale prices, many investors were bearish on January’s Consumer Price Index, due out today, fearing that a similar hike in consumer prices could be yet another sign of inflation.

“We’re very sensitive to any type of inflationary indications that are out there, whether it’s the weaker dollar or if it’s fear of tomorrow’s CPI number,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “Between a lower dollar and higher oil and the bond market a little weak here, you’re seeing an inflation scare coming on a little bit.”

Home Depot said its earnings rose 10 percent for the fourth quarter, meeting Wall Street’s profit forecast of 47 cents a share. The home improvement giant also reiterated its outlook for the full year. But Home Depot lost $1.74 to $40.28, however, as many investors were hoping for a stronger forecast.

Federated fell $1.43 to $55.29 as the company reported profits that beat Wall Street expectations by a penny per share. Revenues, however, fell short for the quarter, and the owner of Macy’s and Bloomingdale’s department stores said its first-quarter profits could fall short of forecasts.

Federated’s stock also was pressured by reports that merger discussions with May were moving forward. The New York Times reported that May was suspending its search for a new chief executive officer because of the progress in talks with Federated. May rose 17 cents to $33.62

Novartis AG added $1.56 to $50.46 as the drug maker announced plans to buy German generic drug maker Hexal AG and U.S. drug maker Eon Labs Inc. for a total of $8.3 billion in cash. Eon Labs surged $2.56 to $30.48.

Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.18 billion shares, compared with 1.93 billion on Friday.