WASHINGTON - A growing fear of economic deflation helped take the air out of the stock market Wednesday, and another white-knuckle final hour on Wall Street pushed the Dow Jones industrials under 8,000 to their lowest close since the financial meltdown began.

Consumer prices in October took their biggest monthly plunge in the six decades that records have been kept - a reprieve for shoppers but a danger sign for the economy because falling prices can make a mild recession spiral into something worse.

The drop illustrated once again how quickly the economic danger can shift in tumultuous times like these. The inflation fears that gripped the nation just a few months ago now seem like a distant memory.

"Consumer price inflation has suddenly screeched into reverse," said Brian Bethune, economist at IHS Global Insight. "The inflation threat has disappeared from the radar screen."

Worried about the economic data, a gloomy outlook from the Federal Reserve and the fate of the Detroit Three automakers, investors yanked money out of the stock market. The Dow drifted lower for most of the day, then plummeted in a tumultuous final hour of trading.

It crossed under 8,000 in the last minutes before the closing bell and closed down 427.47 points, or about 5 percent, at 7,997.28 - its lowest close since March 2003. The average has dipped below 8,000 on other days since the meltdown began in mid-September but had not closed there.

S&P down 6 percent

The Standard & Poor's 500, a broader snapshot of the stock market, slipped more than 6 percent. The financial crisis already has wiped out $6.7 trillion of value from the S&P 500 since its October 2007 high. In the same period, the Dow has lost more than 6,000 points.

"I don't know what the catalyst is going to be where we turn the corner and people start buying stocks wholeheartedly again," said Jon Biele, head of capital markets at Cowen & Co.

The Federal Reserve sharply lowered its economic projections and signaled that further interest-rate cuts might be necessary to ease the economy's worst crisis since the Great Depression.

Documents from the Fed's most recent closed-door deliberations on interest rate policy showed a worry about "significant weakness" in the economy and a worsening job market.

Fed meets Dec. 16

After those deliberations, on Oct. 29, the Fed lowered the benchmark interest rate to 1 percent, a level seen once before in the past half-century.

Many economists believe the Fed will go even lower when it meets again Dec. 16. At the same time, though, the documents showed the Fed had doubts about whether more cuts would help much.

Falling prices might sound like a gift at first. But a prolonged, widespread decline would do serious economic damage, dragging down incomes, clobbering home prices even more and shrinking corporate profits.

CPI record

The consumer price index, the country's most closely watched inflation barometer, dropped 1 percent in October, the biggest monthly decline since the government started keeping records in 1947. Many analysts expect another drop for November.

That's a stunning reversal from as recently as June, when consumer prices spiked 1.1 percent, the second-fastest pace in a quarter-century.

Galloping prices touched off widespread fears about inflation. Worries ran so high then that the Federal Reserve in late June halted its rate-cutting campaign to shore up the ailing economy. Fed Chairman Ben Bernanke and his colleagues fretted that lowering rates further would worsen inflation.

The Fed stayed on the sidelines until Oct. 8, when it joined other major central banks and slashed interest rates in a global effort to limit the damage from the staggering financial system.