NEW YORK – The Dow Jones industrial average sank to a new low for the year this morning as investors worried that the economy cannot sustain itself now that the Federal Reserve has ended its rate-cutting campaign.

The Dow tumbled more than 200 points, led by another nose dive in financial shares, as investors worried that banking and consumer stocks will struggle with the elixir of lower interest rates having been yanked away.

Brokerage shares plummeted after a Goldman Sachs analyst downgraded the sector and as investors braced for another likely round of huge mortgage-related write-offs.

“We are hard-pressed to find a catalyst that will move the group significantly higher over the next few months as fundamentals continue to deteriorate,” Goldman analyst William Tanona wrote in a note to clients. “In addition, we also believe a recovery will take longer than originally anticipated.”

It was more than financials. Most sectors were rocked, including technology, consumer-discretionary, industrials and even energy.

Shares of General Motors sank more than 11% after another Goldman analyst downgraded the stock.

As if on cue, oil prices shot up once again as the dollar fell and Libya said it may curtail production.

As of 8:45 a.m. PDT, the Dow was down 214.87 points, or 1.8%, to 11,598.51. That eclipsed the previous intra-day low of 11,634.82, set on Jan. 22. The Dow is now off 12.5% for the year.

The Standard & Poor’s 500 index, which traded above 1,400 three weeks ago, slumped below 1,300. It was off 22.01 points, or 1.7%, to 1.299.96

The Nasdaq composite index absorbed the biggest hit, tumbling 53.31 points, or 2.2%, to 2,347.95.

The losses brought full circle a recovery that took hold in mid-March after the Fed-engineered rescue of Bear Stearns Cos. and was held in place – until a month ago – on hopes that the economy would be more resilient than feared.

But investors didn’t expect oil prices to explode into a series of record highs that have brutalized American consumers and threatened to throw a monkey wrench into global growth, which had been one of the few bright spots during the housing and credit crises.

 walter.hamilton@latimes.com