Stocks Slump As Concerns About Economy Grow
A sell-off is erasing all of the year's gains in the stock market. Major market indexes fell more than 2 percent Tuesday as investors reacted to more signs of weakness in the U.S. economy and poor earnings from several big companies.
The Dow Jones industrial average plummeted 265 points, to 11,866, a loss of nearly 2.2 percent. The Standard & Poor's 500 index dropped 2.6 percent and the technology-heavy Nasdaq fell 2.8 percent.
The broader stock market is on pace for its longest losing streak in two years.
"The market is starting to wonder where the growth is going to come from," said Nick Kalivas, a vice president of financial research at MF Global. "It hasn't hit the panic button yet, but that's where we're drifting."
Behind the sharp decline in stocks: A series of weak economic reports. The Commerce Department reported that consumers cut their spending in June for the first time in nearly two years. Analysts had predicted a slight increase. Incomes also rose by the smallest amount since September, reflecting a weak job market.
The report comes a day after a weak manufacturing report and last Friday's report that the economy grew at its slowest pace in the first half of the year since the recession ended in June 2009.
All 30 stocks in the Dow lost ground. General Electric Co., Pfizer Inc., Home Depot and United Technologies Corp. led the index lower with losses of 4 percent or more.
This program aired on August 2, 2011. The audio for this program is not available.