NEW YORK (AP) – New concerns from the Federal Reserve about inflation drove stocks sharply lower Tuesday, adding to a spate of profit-taking that erased nearly a month of Wall Street’s gains in the first two sessions of 2005.

According to the minutes of the Federal Open Market Committee’s Dec. 14 meeting, a number of Fed officials said a drop in productivity growth, a weakening dollar and high oil prices could all contribute to inflation, and they hinted that interest rates may have to rise more aggressively to strengthen the dollar and curb inflation.

The Fed had been promising steady, measured hikes in rates; the benchmark federal funds rate stands at 2.25 percent following the Fed’s quarter percentage point increase in December.

The release of the minutes led to a sharp drop in stock prices and a jump in trading volume, exacerbating losses in a session in which investors sold small-cap stocks and riskier investments for a second straight day.

“The Fed’s comments really turned a day of light profit-taking into a day of significant profit-taking,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC.