Dow Tumbles 100 Ahead of Senate Vote
Stocks declined Tuesday amid worries over economic growth and as a last-minute congressional deal to raise the U.S. debt ceiling failed to ease worries about a possible U.S. credit downgrade.
The Dow Jones Industrial Average slid for the eighth-straight session, led by Pfizer and GE , after declining for the seventh-straight session. The Dow has not fallen for eight consecutive days since October 2008.
The S&P 500 and the tech-heavy Nasdaq also fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell near 23.
Among key S&P sectors, telecom and industrials lagged.
U.S. House of Representatives passed a legislation to raise the government’s borrowing limit beyond $14.3 trillion until 2013 and cut public spending by $2.1 trillion over the next decade.
The Senate is due to vote on the bill at noon New York timewith lawmakers expected to pass the bill. Shortly after, President Obama is scheduled to deliver a statement to the press. (CNBC.com will stream this event live.) However, concerns persist that the deal will still not prevent America from losing its triple-A credit rating.
“I’m not so sure that the debt deal is well received or if it’s what everyone wanted,” said Steven Carl, head equity trader at Williams Capital Group. “[Traders have] more of a macro view to see if anything happens overseas.”
On the economic front, consumer spending unexpectedly slid 0.2 percent in June to post the first decline since September 2009, after rising 0.1 percent in May, according to the Commerce Department, suggesting economic growth could remain weak in the third quarter.
Economists had expected spending to rise 0.2 percent, according to a Reuters poll.
The disappointing news follows a weak manufacturing reportand renewed concern over the European debt crisishelped to kill off the relief rally in the previous session.
Gold rallied above $1,640 an ounce—its ninth record high this year amid growing fears about the euro zone debt crisis in addition to the gloomy outlook for the U.S. economy.
Wal-Mart declined after Jefferies cut its ratingon the big-box retailer to "hold" from "buy."
Meanwhile, GM said U.S. sales gained 7.8 percent in July, but still less than analysts' expectations of 9.9 percent. Rivals Ford and Toyota are also expected to post this afternoon.
On the earnings front, Pfizer reported profit and sales that edged expectations, but were still lower due to generic competition.
Meanwhile, Archer Daniels Midland slipped after the agricultural processor said earnings declined as a sharp jump in income tax expenses dragged on results.
Coach tumbled after the handbag maker said margins declined, due to higher labor costs.
Ctrip.com plunged to lead the Nasdaq 100 laggards after the Chinese travel agency reported lighter-than-expected revenue, while profit came in line with estimates.
CBS is expected to report earnings after-the-bell. Evercore Partners boosted its price target to $31 from $28.
Toyota Motor slipped after the automaker posted its first loss in two years as Japan's earthquake hammered production and the yen's rise hit profitability on exports.
In Europe, the spreads for Spanish and Italian credit default swaps rose to a new record high. In addition, officials from the Italian government, Bank of Italy and market authorities are to meet to discuss the market turbulence.
Barclays slipped after the bank said profits fell by a third and added it is cutting about 3,000 jobs this year. This comes after HSBC announced that it would be cutting up to 30,000 jobs worldwide.
European shares hit their lowest close in 11 monthsamid concerns over weak global growth and concerns over the euro zone debt crisis.
Coming Up This Week:
TUESDAY: Earnings from CBS
WEDNESDAY: Weekly mortgage apps, Challenger job-cut report, ADP employment report, factory orders, ISM non-mfg index, oil inventories; Earnings from Comcast, MasterCard
THURSDAY: Weekly jobless claims, money supply, chain-store sales; Earnings from GM, AIG, Kraft, Sunoco
FRIDAY: Employment situation, consumer credit; Earnings from P&G
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