By Kate Gibson
A broad decline in U.S. stocks that sent the Dow industrials
briefly below 10,000 ended with a thud Tuesday, after dismal data
on the housing market intensified worries about the global economic
recovery.
"The calendar is getting away from me as a bull," said Linda
Duessel, equity strategist at Federated Investors. But Duessel
dismissed the notion of a double-dip recession. "I'm still in the
camp that believes we're in a soft patch," she said.
Dow Jones Industrial Average (DJI) closed down 133.96 points, or
1.3%, at 10,040.45, with the index moving back into a triple-digit
loss late in the session, its fourth straight down session.
The blue-chip average briefly fell as low as 9,991.18 earlier,
its first dip below the 10,000 mark since the first week of
July.
Of the Dow's 30 components, all but five closed in the red.
Industrial conglomerates particularly sensitive to global economic
trends led decliners, with Boeing Co. (BA) down the most, off 3.7%.
Alcoa Inc. (AA) fell 3% and Caterpillar Inc. (CAT) lost 2.7%.
AT&T Inc. (T) and Kraft Foods Inc. (WMT) rose the most,
posting gains of 0.9% and 0.5%, respectively.
The S&P 500 Index (SPX) fell 15.49 points, or 1.5%, to
1,051.87, with materials, health care and industrials weighing the
most among its 10 industry groups. Beyond Boeing, notable decliners
in the industrials sector included FedEx Corp. (FDX), down 2.9%. AK
Steel Holding Corp. (AKS) lost 5.1% and Freeport-McMoRan Copper
& Gold (FCX) fell 4.7%.
Stock had significantly pared losses earlier in the day,
reflecting some ambivalence among investors toward reports that
have been muddied by stimulus programs.
The action was "a clear message that the market knows the
housing data before and after the tax credit deadline is completely
distorted and thus a worthless take on the state of the market,"
wrote Peter Boockvar, equity strategist at Miller Tabak.
The Nasdaq Composite Index (RIXF) declined 35.87 points, or
1.7%, to 2,123.76.
Declining stocks outpaced advancers by a more than 3-to-1 ratio
on the New York Stock Exchange, where 1.18 billion shares traded
hands. That's 117% of the exchange's average volume over 30 days,
according to FactSet.
In commodities, crude-oil futures closed down $1.47 at $71.63 a
barrel, while gold futures ended up $4.90 at $1,233.40 an
ounce.
Investors flocked to the perceived safety of government bonds,
with the 10-year Treasury yield (UST10Y) dropping below 2.5% for
the first time since 2009.
Bidders drew the lowest yield yet in an auction for two-year
notes, with a $37 billion sale netting a high yield of 0.498%, the
first time a Treasury sale for the two-year note has received a
yield under 0.5%.
"When no one wants to touch anything else, you get a decent
auction," remarked Boockvar.
Global fall
Ahead of Wall Street's start, global markets fell, with Japanese
stocks pacing the decline as the yen hit a 15-year high against the
dollar. Since Japan's economy is heavily reliant on exports, a
stronger Japanese currency curbs the profits of large Japanese
companies.
The National Association of Realtors reported sales of existing
U.S. homes fell more than 27% in July, the largest one-month drop
on record. .
In a speech delivered in Indianapolis, Federal Reserve Bank of
Chicago President Charles Evans said unemployment is now behind
more housing defaults than careless lending.
Fed Chairman Ben Bernanke is scheduled to talk about the
economic outlook in an address later in the week in Jackson Hole,
Wyo.
On Capitol Hill, House Minority Leader John Boehner (R., Ohio)
called on President Barack Obama to ask for the resignations of
Treasury Secretary Timothy Geithner and Larry Summers, head of the
White House's economic team. .
Shares of 3Par Inc. (PAR) gained 3% after Bloomberg News
reported Dell Inc. (DELL) was preparing to increase its bid for the
data-storage provider after Hewlett-Packard Co. (HPQ) topped its
prior offer.
Economic reports to be released later in the week include a
report on new-home sales and weekly jobless claims, along with a
measure of consumer sentiment.