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NEW YORK — The Nasdaq composite index fell to its lowest level in nearly two years Wednesday after an unexpected surge in inflation intensified investors’ fears about the future. 

The Dow Jones industrial average also plunged more than 200 points in heavy trading after the government reported the biggest increase in consumer prices in 10 months. 

Analysts said the data made already nervous investors even more reluctant to take strong positions in a market that might not recover for a while. 

“These inflation numbers were something that was not supposed to happen, and when you’re in a tenuous market ... investors get scared,” said Barry Hyman, chief investment strategist for Weatherly Securities. “There’s just too many unknowns in front of the market at this point.” 

The tech-focused Nasdaq dropped 49.41 and its lowest close since March 3, 1999. It is now 55 percent below its all-time closing high reached last March. 

All three indexes are all down for the year. The Dow is off 2.4 percent for the year, the Nasdaq down 8.2 percent and the S&P off 4.9 percent. 

Wednesday’s losses came on a Labor Department report showing a 0.6 percent gain in its Consumer Price Index for January – chiefly because of increases in natural gas and electricity prices, which have since eased.  

Those numbers caught some market watchers off guard, although many believe that, at least for now, the data is an aberration rather than the beginning of a trend. 

“In the current circumstances, these numbers are not as big a deal,” said Merrill Lynch chief economist Bruce Steinberg. “The economy is weak and you just don’t get inflation developing in these circumstances.” 

Investors were not reassured, however. A broad stock selloff intensified late in the day after fluctuating earlier in the session. 

Financials were pulled lower by banker J.P. Morgan Chase, down $2.60 at $47.35. The Dow fell on losses in its manufacturing sectors: 3M dropped $1.98 to $111.26 and Boeing lost $1.65 to $60.20. 

— The Associated Press 

Technology also weighed down the markets as bargain hunters pushed the battered sector’s stock prices higher only to be replaced by sellers seeking to preserve their profits. 

Oracle fell 13 cents to $23, while Intel, which is also a Dow component, dropped 69 cents to $30.75. IBM’s $3.99 slip to $107.51 also hurt the blue chip index. 

Utility stocks, which are viewed as safer investment in a weak economy, fared better. Edison International rose 35 cents to $13.45 and PG&E was up 7 cents at $13.06. 

Health care stocks were also strong, led higher by Merck, up 81 cents at $78.71. 

But Wall Street was primarily in a selling mood — a reflection, analysts said, of investors’ doubt about whether the economy and whether the Federal Reserve Board is doing enough to stimulate growth. 

The Fed is expected to cut interest rates for a third time this year when it meets again next month. But investors are no longer sure the action will be enough to improve corporate profits anytime soon. 

“People are starting to get concerned that things are really bad. Even if the inflation is not a long-term story, it’s still going to hurt market sentiment,” said Hyman, the Weatherly Securities analyst. 

Declining issues outnumbered advancers 3 to 2 on the New York Stock Exchange. Consolidated volume came to 1.43 billion shares, ahead of the 1.34 billion reported Tuesday. 

The Russell 2000 index dropped 7.63 to 483.51. 

Overseas, stocks were weak. Japan’s Nikkei stock average fell 1.1 percent. Germany’s DAX index was down 1.6 percent, Britain’s FT-SE 100 dropped 0.1 percent, and France’s CAC-40 tumbled 1.3 percent. 

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On the Net: 

New York Stock Exchange: http://www.nyse.com 

Nasdaq Stock Market: http://www.nasdaq.com