Crude prices surged above 144 U.S. dollars a barrel as the government reported a bigger-than-expected drop in U.S. supplies and as investors worried about tensions in the Middle East.

Concerns that GM could go so far as to declare bankruptcy added to investors' worries. The stock fell about 15 percent as investors worried about the company's cash needs.

On Tuesday, U.S. Treasury Secretary Henry Paulson said high oil prices, further home price declines and capital markets turmoil will prolong the U.S. downturn.

The Dow Jones Industrial Average fell 166.75, or 1.46 percent, to 11,215.51. The Standard & Poor's 500 index fell 23.39, or 1.82 percent, to 1,261.52, and the technology-laden Nasdaq composite index fell 53.51, or 2.32 percent, to 2,251.46.(Xinhua)