Stocks sold off sharply to end at session lows Tuesday with the Dow down for an eighth day amid economic worries and even after President Obama signed a bill to avoid a debt default.
The Dow Jones Industrial Average plunged 265.87 points, or 2.19 percent, to end below the psychologically-important 12,000 mark at 11,866.62. The last time the blue-chip index declined for eight-consecutive days was in October 2008.
All 30 Dow stocks ended lower, with Pfizer and GE leading the biggest laggards.
The S&P 500 plummeted 32.89 points, or 2.56 percent, to close at 1,254.05, slipping into negative territory for the year.
The tech-heavy Nasdaq tumbled 75.37 points, or 2.75 percent, to finish at 2,669.24. The S&P 500 and Nasdaq are both below their 200-day moving averages.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, gained above 24.
All 10 key S&P sectors tumbled, led by consumer discretionary and industrials.
Volume was better than usual with the consolidated tape of the NYSE at 5.1 billion shares, while 1.25 billion shares changed hands on the floor.
Just hours before a deadline to avert a debt default, President Obama signed a bill that raises the $14.3 trillion debt ceiling and sets in motion a plan to reduce U.S. deficits over 10 years. Obama said the bill was a "first step" toward ensuring the U.S. lives within its means but that more was needed to rebuild the economy.
Meanwhile, Fitch maintained its AAA rating on the U.S. and said while the risk of a sovereign default is "extremely low," the government still has more work to do to maintain its 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.”
In Europe, the spreads for Spanish and Italian 10-year bonds dropped, pushing yields up to a new record highamid worries that slowing economic growth will hamper efforts to tame the nations’ debt loads.
"There's no way for [Spain and Italy] to sustain their debt," said Dave Rovelli, managing director of equity trading at Canaccord Genuity. "All the banks in Europe own each others' debt...It wasn't so bad when it was Greece and Portugal, but now you're getting Italy and Spain."
Industrials have tumbled in recent weeks amid worries over a slowing global economy, sending the sector into correction mode. Companies including GE , Deere , IngersollRand have sank almost 20 percent from their highs in April/May.
Gold surged above $1,645 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. Gold miners were among the only sectors in the black led by firms including Newmont Mining and Anglogold .
Wal-Mart declined after Jefferies cut its ratingon the big-box retailer to "hold" from "buy."
Meanwhile, automakers including Ford and GM posted July sales in line with expectations. Meanwhile, Toyota sales plunged 23 percent, as the Japanese automaker struggles to recover after the earthquake. Toyota also posted its first earnings loss in two years as production was hammered.
Also among earnings, Pfizer reported profit and sales that edged expectations, but were still lower due to generic competition.
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. Meanwhile, Jefferies raised its price target on the firm to $60 from $54.
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.
Among European banks, Barclays slipped after the bank said profits fell and announced it is cutting about 3,000 jobs this year. This comes after HSBC also said it would be cutting up to 30,000 jobs worldwide.
On the economic front, consumer spending unexpectedly slid in June to post the first decline since September 2009, according to the Commerce Department, suggesting growth could remain tepid in the third quarter. The disappointing news follows a weak manufacturing reportin the previous session.
The government's key monthly jobs report for July is expected Friday and will be closely watched by investors.
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:
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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