The Dow Jones industrials tumbled nearly 400 points after oil prices shot up nearly $11 to near $140 a barrel.

The prospect of higher energy prices that could hobble consumers and worsen a slowing economy had investors frenetically pulling money out of stocks. The rising energy prices compounded investors' anxiety over unemployment, which for May showed its biggest monthly rise since 1986.

Salt Lake City economist Jeff Thredgold, a Zions Bank consultant, said people need to get used to the seesawing stock market and oil prices.

"This volatility is going to continue," he said. Thredgold believes oil prices will ease later this year. "But in the meantime, it could reach some really lofty levels," he said.

But Thredgold said investors should try not to panic, although he can see why some people who are heavily invested in stocks are uncomfortable.

"It's hard to watch stocks go down, and it's hard to watch all the volatility," he said.

Crude oil has seen a huge increase in price this week after falling amid a drop in demand for gasoline. The price increases continued Friday, with light sweet crude setting a high of $139.12 in after-hours trading on the New York Mercantile Exchange after gaining $10.75 in the regular session. The surge followed a Morgan Stanley analyst's prediction that crude would reach $150 a barrel by July 4; a decline in the dollar and fresh tensions in the Middle East added to crude's advance.

Oil investors' frantic buying of crude futures made it clear that the market could make the Morgan Stanley prediction a reality. And on Wall Street, crude's soaring price intensified worries that ever-expensive fuel will lead consumers to curtail their spending on nonessentials. With gasoline at the threshold of a national average of $4 a gallon, crude's surge higher is expected to propel gas even higher - and make Americans even more reluctant to spend on nonessential items.

In Utah, the average cost of a gallon of unleaded gasoline in Utah reached another record high Friday of $3.96.

Wells Fargo economist Kelly Matthews said the stock market also appeared to be rattled by comments by Israel's transportation minister, who said his country will attack Iran if it doesn't give up its nuclear program.

Matthews said he grew hopeful that the dollar would strengthen and oil prices would moderate earlier this week when Federal Reserve Chairman Ben Bernanke said he had no intention of cutting interest rates further.

"And that's exactly what happened until sometime yesterday when we saw a major jump in crude oil price, and now today another increase," Matthews said Friday. "There's just no economic reason for crude oil prices to jump $15 to $16 a barrel, unless there is some explanation such as [the Israeli's remarks]."

Whether the stock market stabilizes or continues to fall will depend largely on what signals Israel sends out next week, Matthews said.

"We all hope and believe that somehow negotiations clarify the situation and that in fact the perception of the markets three days ago that perhaps crude oil prices were near a peak will return and we sort of settle back down," he said.

The spike in energy prices came as the Labor Department said the nation's unemployment rate jumped to 5.5 percent in May from 5.0 percent in April. It was the biggest monthly increase since February 1986, and the rise leaves unemployment at it highest level since October 2004. Wall Street had predicted an uptick to 5.1 percent.

The number of U.S. jobs shrank by a smaller-than-expected 49,000, but that development offered Wall Street little solace given that May marked the fifth straight month of jobs losses.

Matthews said the rise in the U.S. unemployment rate to 5.5 percent probably was a lesser factor in the Dow's decline Friday than oil prices.

He said the increase in joblessness was "a statistical quirk" that was not consistent with signs showing that important elements of the economy have stabilized or improved recently.

"I don't think the economy has weakened to be consistent with that number in one month. Sure, it's possible that our economy is up to 5.5 percent unemployed, but it shouldn't be reflected that May was a very weak month. I think May was a relatively OK month, in terms of the economy," Matthews said.

Salt Lake City financial planner Sharla Jessop also said investors shouldn't panic. In fact, one of the worst moves right now would be to pull your money out of stocks because the market is probably at or near the bottom in this bear-market cycle.

"You want to be aware what's going on the market, but you don't want to overreact," she said. "If you have 20 or more years until you need your money, these times make for great buying opportunities."

But for those who have a shorter time span or who don't like to take much risk, it could be a time to reflect on your portfolio and make sure they are well diversified among not only stocks but other types of investments as well.

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* LESLEY MITCHELL and PAUL BEEBE contributed to this report.