NEW YORK (CNNMoney.com) -- Stocks slumped for a second straight session Thursday, with the Dow posting its biggest point loss in six weeks, in response to escalating tensions in the Mideast, record oil prices and worries about corporate profits.

The Dow Jones Industrial average (down 166.89 to 10,846.29, Charts) skidded about 1.5 percent. The world's most widely watched stock market gauge sank 1 percent Wednesday.

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The broader Standard & Poor's 500 (down 16.31 to 1,242.29, Charts) index fell 1.3 percent. The Nasdaq composite (down 36.13 to 2,054.11, Charts), laden with tech stocks, tumbled 1.7 percent.

Treasury bonds and gold prices rose as investors sought safety. Oil hit an all-time closing high near $77 a barrel.

After a tough start to Thursday's session, the major gauges trimmed some losses heading into midday. But then the selling picked up again as fighting between Israel and Lebanon's Hezbollah intensified into what Mideast officials say amounted to war. That in turn sent oil prices soaring to record highs.

The combination of geopolitical tension and rising oil sent investors seeking safety, pulling money out of stocks and putting it into assets like Treasurys and gold, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

Downbeat brokerage notes on companies such as Walt Disney and Wal-Mart added to the day's weakness.

"What compounds the problem for investors is we are in the earnings period in which companies and analysts start lowering forecasts for the year," he said, referring to the tendency of Wall Street to revise full-year outlooks as second-quarter results roll in.

Stocks have struggled since late May on worries about slowing economic growth and rising interest rates - and what some say may be the end of the three-and-a-half-year-old bull market.

The pressure on investors seems to have intensified in recent days, said Michael Sheldon, chief market strategist at Spencer Clarke, citing the challenges both nationally and internationally.

The stock market is also heading into what is typically the toughest time of year - midsummer to early fall.

"It's hard to see in the short term what could turn the market around and lead to a new bull market," Sheldon said.

As of 5:30 p.m. ET, Nasdaq and S&P futures pointed to modest losses at the open Friday, when fair value is taken into account.

Friday morning's big event is earnings from General Electric (Charts), due before the start of trading. Friday also brings the June retail sales report and the first look at July consumer sentiment from the University of Michigan.

In addition to GE, book chain Borders Group (Charts) could be active Friday, after the company warned late Thursday that second-quarter and full-year earnings and sales will not meet Wall Street forecasts. Shares slumped 18 percent in extended-hours trading.

U.S. light crude oil for August delivery rose $1.75 to settle at $76.70 a barrel on the New York Mercantile Exchange, a record closing high, after hitting a new trading high of $76.90 earlier in the session.

Oil has been climbing of late amid the rising violence in the Mideast, the bombings in India Tuesday and blasts Thursday to a Nigerian pipeline.

A fire in a Venezuelan refinery and Wednesday's surprisingly large drop in weekly U.S. crude oil inventories added to worries about oil supplies.

COMEX gold for August delivery rose $3.20 to settle at $654.80.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 5.07 percent from 5.10 percent late Wednesday. Bond prices and yields move in opposite directions.

The dollar weakened against other major currencies, after spiking Wednesday in response to the narrower than expected May U.S. trade deficit.

On the corporate front, several major companies suffered analyst downgrades ahead of the first big week for second-quarter earnings.

Merrill Lynch cut its rating on Dow component Wal-Mart Stores (down $0.99 to $44.16, Charts) to "neutral" from "buy," citing concerns about slowing sales. Shares of the retailer fell 2.2 percent.

CIBC World Markets cut its rating on fellow Dow stock Walt Disney (down $1.21 to $28.70, Charts), sending its shares down 4 percent.

General Motors (down $1.30 to $28.32, Charts), also a Dow component, slumped 4.4 percent in afternoon trade. In the latest development, the automaker's CEO said he wanted to move quickly in reviewing a potential alliance with Renault and Nissan Motor.

Meanwhile, Renault and Nissan's CEO said he would not seek the top job at GM, even if an alliance between the companies was struck.

Merck (up $0.24 to $36.94, Charts) shares moved slightly higher after the drugmaker was found not liable in the seventh lawsuit regarding Vioxx, its withdrawn painkiller. Shares had fallen prior to the announcement.

Declines were broad based, with 27 out of 30 components of the Dow industrials closing lower. Other Dow decliners included Honeywell (down $0.91 to $37.99, Charts), J.P. Morgan (down $0.86 to $41.39, Charts) and Alcoa (down $1.06 to $30.99, Charts).

Ford Motor (down $0.32 to $6.56, Charts) shares sank 4.7 percent after the automaker said it was cutting its dividend in half and reducing its directors' pay.

Software leader SAP (down $3.51 to $46.83, Charts) warned that second-quarter software license sales and overall revenue will miss forecasts, sending another chill through the vulnerable technology sector. SAP fell 7 percent in unusually active New York Stock Exchange trading.

Semiconductor maker Cree (down $4.86 to $17.73, Charts) slumped almost 22 percent after warning that its fiscal fourth-quarter profit would miss forecasts.

PC maker Dell (down $0.68 to $21.70, Charts) announced a plan to cut back on mail-in rebates that it says will simplify its pricing structure. Shares initially climbed 1 percent on the news but soon turned negative.

On the upside, PepsiCo and Marriott International both reported higher than expected quarterly earnings. PepsiCo (up $0.97 to $62.07, Charts) shares added 1.6 percent, but Marriott (down $1.22 to $36.15, Charts) lost 3.3 percent.

Market breadth was negative. On the New York Stock Exchange, losers topped winners nearly 13 to 4 as 1.77 billion shares changed hands. On the Nasdaq, decliners beat advancers 4 to 1 on volume of 2.07 billion shares.

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