Updated from 4:09 p.m. ESTDowngrades and a cautious Fed sent stocks reeling for a second day Tuesday as nervous investors bailed out of speculative names that ran up in the last quarter of 2004. In frantic volume, the tech-laden Nasdaq Composite index lost 44.29 points, or 2.06%, to 2107.86, dragged down by heavy selling in Amazon.com ( AMZN) and Sun Microsystems ( SUNW), both of which were downgraded Tuesday morning. The composite fell 23 points on Monday and is currently 3.8% below the high of 2191.6 it touched in Monday's first hour. Tuesday marked the worst single-day loss since July 21 of last year. "Sectors had tremendous runs during the fourth quarter," said Paul Nolte, director of investments with Hinsdale Associates. "Today everyone is taking out the best-performing sectors, like tech stocks; it's like first-to-worst. I think too you have a lot of investors with long-term capital gains. It's definitely profit-taking." The Dow Jones Industrial Average shed 98.65 points, or 0.92%, to 10,630.78, while the S&P 500 fell 14.03 points, or 1.17%, to 1188.05, its worst decline since Aug. 5. Selling intensified in all three major indices after the Federal Open Market Committee released minutes from its Dec. 14 meeting showing growing concern about speculation in asset markets. Some FOMC members voiced concern that low rates "might be contributing to signs of potentially excessive risk-taking in financial markets, evidenced by quite narrow credit spreads, a pickup in initial public offerings, an upturn in mergers and acquisition activity and anecdotal reports that speculative demands were becoming apparent in the markets for single-family homes and condominiums," the minutes read. "No one likes to see inflation put into print next to the Fed's name," said Art Hogan, chief market analyst with Jefferies. "What came out today was commentary from the Fed that rates were too low to keep inflation stable. The consensus is that the Fed will be in a tightening mode for the rest of 2005 and will raise the rate at each meeting, getting the rate up to 4%." The federal funds rate is now at 2.25% after five increases since the end of June. The Fed minutes hammered fixed-income markets. The 10-year Treasury note was recently down 21/32 in price with the yield at 4.29%, while the dollar was higher against the yen and euro. February crude closed up $1.79 to $43.91 a barrel. Volume on the NYSE was 1.72 billion shares, with decliners beating advancers by a ratio of 3-to-1. Volume on the Nasdaq was 2.69 billion shares, with decliners outpacing advancers by the same ratio.