Dow’s down 237 points this morning, landing at 9,901.
NEW YORK (AP) — Stocks and interest rates tumbled Tuesday after
signs of slowing economies around the world spooked traders.
The Dow Jones industrial average fell about 270 points in afternoon
trading to drop below 10,000 for the first time since June 10. The
Dow and other major indexes each lost more than 2 percent.
Stocks began the day by following Asian and European markets lower.
Asian markets fell after an index that forecasts economic activity
for China was revised lower. And then European indexes fell sharply
after Greek workers walked off the job to protest steep budget
Then, shortly after U.S. trading began, the market was hit with
news that consumer confidence fell sharply this month because of
worries about jobs and the overall economy. The Conference Board’s
Consumer Confidence Index fell to 52.9 from a revised 62.7 in May.
It was the steepest drop since February and economists polled by
Thomson Reuters had forecast only a modest dip.
Interest rates fell in the bond market after investors sought the
safety of Treasurys. The yield on the 10-year note dropped to as
low as 2.97 percent, the first time it has fallen below 3 percent
since April 2009. The yield, which is used as a benchmark for many
consumer loans and mortgages, bounced off its low to 2.98 percent
but was still down from 3.03 percent Monday.
Falling yields are a sign that investors are willing to give up
potential gains in stocks for more certain, but smaller profits in
Companies have indicated that business is getting better, yet there
are few signs they are ready to hire in big numbers. The Labor
Department’s monthly employment report due Friday is expected to
show the unemployment rate rose 0.1 percentage point to 9.8 percent
Industrial stocks suffered some of the steepest drops on fears that
a stalled global rebound will cut demand. Aircraft maker Boeing Co.
led the Dow lower with a drop of 5.5 percent. Caterpillar Inc., the
maker of construction and mining equipment, lost 4.9 percent.
Shares of coal producers pulled energy stocks lower on worries
about a slowdown.
Paul Zemsky, head of asset allocation at ING Investment Management
in New York, said investors are wrestling with two opposing ideas
of where the economy is headed. He said the more likely case is
that the recovery continues and corporate earnings growth make
stocks look cheap right now. The darker scenario is that government
budget cuts, the end of fiscal stimulus, problems in Europe and a
slowdown in China lead to a double-dip in the global economy.
Investors’ indecision and uneven economic reports have brought big
swings to stocks since late April when debt problems in Greece
began to pound world markets.
“The central issue that any investor faces today is fire or ice,”
Zemsky said. “There’s no in-between. It’s either one or the
In midafternoon trading, the Dow fell 270.33, or 2.7 percent, to
9,867.81. The Standard & Poor’s 500 index fell 32.98, or 3.1
percent, to 1,041.59, while the Nasdaq composite index fell 77.04,
or 3.5 percent, to 2,143.61.
Only about 230 stocks rose while about 2,790 stocks fell at the New
York Stock Exchange, where volume came to 608 million shares,
compared with 401 million shares traded at the same point
Crude oil fell $2.45 to $75.80 per barrel on the New York
The Chicago Board Options Exchange’s Volatility Index rose 18.9
percent. The VIX is known as the market’s fear gauge because a rise
signals traders are expecting more drops in stocks.
A report that found home prices rose in April didn’t help the
market. The S&P/Case-Shiller home price index 20-city home
price index rose 0.8 percent between March and April. The gains,
though, are likely being written off because April was the final
month when buyers could receive a tax credit. Nearly all housing
indicators got a boost from the credit, but have since signaled a
Zemsky said there isn’t much until the start of corporate earnings
reports in the next month that likely will be able to give
investors solid answers about the direction of the economy. Until
then, Friday’s June jobs report is the one standout. Even with a
good report, investors might still be focused on earnings. The May
jobs numbers were a disappointment because private employers hired
only 41,000 workers.
“I don’t think Friday payrolls can do a lot to bring the market a
whole lot higher if they’re good. But if they’re bad, it’s really
‘Look out below,”’ Zemsky said.
Worries about Europe again hit the market. The euro, the common
currency used by 16 European nations, fell to $1.2191. The moves in
the currency are seen as a measure of confidence in Europe’s
economy following Greece’s near default and steep budget cuts
around the continent to combat deficits. World markets have
regularly dropped along with the euro in recent months.
Greek workers on Tuesday protested the cost-cutting the government
is doing to reduce debt. The measures were a requirement for Greece
to receive a bailout from other European Union members and the
International Monetary Fund.
The new round of protests sparked renewed concerns about how well
European countries will be able to stick to austerity plans.
Investors have been worried for months that Europe’s economy would
slow and hurt a global recovery.
“People are starting to see that this recovery, as it is, is going
to take considerably longer than anybody had anticipated,” said
Doreen Mogavero, president of brokerage Mogavero, Lee & Co. in
Mogavero said the jobs report will be key to giving some indication
of whether the recovery can hold up.
“That is the core of the recovery here. People have to feel they’re
going to work. If they don’t they’re not going to spend money,” she
said, noting that consumers are the biggest driver of the U.S.
In other trading, Chinese markets fell after the Conference Board’s
Leading Economic Index for China was revised to 0.3 percent for
April from 1.7 percent.
Meanwhile, the Japanese government reported that export demand
moderated and household spending dropped last month. Unemployment
also rose unexpectedly, climbing for the third straight month.
Boeing fell $3.72, or 5.5 percent, to $63.58 and Caterpillar, also
a Dow stock, fell $3.17, or 4.9 percent, to $61.23.
Coal company Peabody Energy Corp. fell $2.91, or 6.9 percent, to
$39.58, while Massey Energy Co., also a mining company, fell $1.75,
or 5.8 percent, to $28.45.
The Russell 2000 index of smaller companies fell 22.07, or 3.4
percent, to 619.47.
The Shanghai composite index fell 4.3 percent to a 14-month low.
Japan’s Nikkei stock average fell 1.3 percent. Britain’s FTSE 100
fell 3.1 percent, Germany’s DAX index dropped 3.3 percent, and
France’s CAC-40 fell 4 percent.