Wall Street skidded yesterday after several events appeared to confirm traders’ expectations that the American economy is facing serious trouble going into the new year.

The rise of oil prices above $97 a barrel, the death of the Pakistani opposition leader, Benazir Bhutto, and weak economic indicators for the domestic economy contributed to a spate of selling yesterday, pushing all the major indices down and increasing the likelihood that the Federal Reserve will cut interest rates again in 2008, economists say.

The Dow Jones Industrial Average fell 192.08 points yesterday to 13,359.61, while the S&P 500 dropped 21.29 points to 1,476.37 and the Nasdaq Composite Index declined by 47.62 points to 2,676.79.

“I think that the real key here is the assassination,” the chief economist at First Trust Advisors, Brian Wesbury, said. “People are on pins and needles now, waiting for something bad to happen.”

In addition to foreign politics causing a stir on Wall Street, new data released yesterday showed that America’s housing crisis continues to send shock waves throughout the economy as both the labor market and demand for American durable goods appear even more anemic than analysts had predicted.

The number of Americans filing first-time claims for unemployment insurance last week increased by 1,000, bringing the number of people collecting unemployment benefits to a high not seen since the aftermath of Hurricane Katrina, according to the Labor Department.

In the wake of the mortgage crisis, businesses related to real estate are finding it difficult to hold on to their workers. Construction companies in particular are laying off employees, as fewer houses are being built.

The weak numbers come on the heels of a record decline in home prices in October, reported earlier this week by Standard & Poor’s S&P/Case-Shiller index for 10 major metropolitan areas. It found that home prices were down 6.7% over the same month last year, exceeding the previous record year-to-year decline of 6.3% in 1991.

“We were expecting a fairly significant slowdown … and these numbers confirm that the slowdown is in process,” a director of financial economics for Global Insight, Brian Bethune, said.

Durable goods orders in November also were lower than analysts expected, indicating weak demand for expensive American-made products and further problems for the domestic economy. November orders rose just 0.1%, significantly lower than the 4.5% jump predicted by economists at Ried Thunberg ICAP.

The 0.1% increase in durable goods orders followed three consecutive months of decreases, including a 0.4% decrease in October. Increased demand for transportation equipment, especially planes, was the main contributor to November’s modest increase. Boeing Co. received orders for 177 planes in November, more than triple the number ordered the previous month.

Ried Thunberg ICAP wrote in a report that the Commerce Department’s numbers suggest equipment and software spending may remain “decent” in the fourth quarter. However, “the weakness in orders doesn’t bode especially well for continued strength in such spending in the months ahead,” it wrote.

Mr. Bethune said, “Some people have been saying, ‘Put up or shut up,’ and I think these numbers basically put up the story that things are pretty weak out there.” He said he expects to see less than 1% growth for the fourth quarter of 2007 and less than 1% in early 2008.

Analysts at Goldman Sachs yesterday predicted that American banks would continue to suffer from the mortgage crisis well into 2008, raising their estimates for fourth-quarter writedowns at Citigroup, JPMorgan Chase, and Merrill Lynch to a combined $33.6 billion.

Economists are looking to yesterday’s numbers in order to predict how the Federal Reserve will act in early 2008. Signs of a flagging economy make it more likely that the Fed will continue to cut interest rates, they say.

“We think the Fed still needs to reduce rates, and so we’re calling for another 50bps in rate reduction in early 2008,” Mr. Bethune said. “A broadening of the economic weakness would certainly indicate the Fed needs to do more. How much they’re going to balance that against future inflation risks still remains to be seen.”