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Stocks Tumble Further In Final Hour of Trading

Stocks fell further in late trading Tuesday as energy stocks dragged and technology and health care stocks were higher.

The Dow Jones Industrial Average was down over 100 points, led by Alcoa , Home Depot and Caterpillar , after bobbing in and out of positive territory earlier and snapping a four-session winning streak on Monday.

The S&P 500 and tech-heavy Nasdaq also traded lower. The CBOE volatility index, widely considered the best gauge of fear in the market, was below 25.

Investors took a one-two punch of bad news this morning: Existing-home sales fell 2.2 percentin May from April, and Fitch Ratings slashed its rating on BNP Paribas, the largest bank in the euro zone by deposits.

But while some experts say the grim economic data is pushing the markets toward a double dip, Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel said investors should not be worried.

"You’re not going to see a double-dip—but it’s going to feel like it as the market becomes more volatile,” he told CNBC.

Energy was the weakest sector as oil fell back toward $77 a barrel.Utilities and industrials were also weak. Meanwhile,gold rose above $1,240 an ounce.

US-traded shares of BP fell after CEO Tony Hayward backed off from managing the oil spilland Bob Dudley, who has managed the company's problems in Russia, took the reins for managing the crisis.

But shares of Diamond Offshore and a few other deepwater drillers rose slightly after a federal judge blocked the offshore drilling moratorium imposed by the Obama administration.

Health care and technology were among the day's best performers, with Microsoft and Apple both up more than 1 percent.

Deutsche Bank raised its price target for Apple while Barclays Capital said a new carrier for Apple's iPhone "would extend and accelerate the iPhone 4 cycle." The iPhone 4 is expected to debut this week. Apple also said it sold 3 million iPad tablet computers in 80 days.

And shares of Verizon also rose after CEO Ivan Seidenberg said the telecommunications firm is ready to sell the iPhone, but the decision is up to Apple.

U.S. tech executives anticipate increases in global IT spending internationally and expect to see stronger revenue and profitahead for the industry next year, according to a recent survey by KPMG.

The survey also found that most of its respondents ranked China and India as the top countries to have the highest revenue growth and the highest employment growth during the next 12 months.

"The big firms are going to do very well,” Mark Stahlman of TMT Strategies told CNBC. “We’re going to have better than expected results from IBM , which is highly leveraged to infrastructure in the developing world. And Intel said they are going to double their top and bottom-line growth in the next few years."

Meanwhile, House and Senate Democrats are scrambling to complete their financial regulation overhaulbefore President Obama meets with world leaders at G20 meeting in Canada this weekend, ironing out differences on a range of complicated provisions from bank regulation to consumer protection.

The financial sector was largely mixed: JPMorgan shares rose after the bank shook up its management.

And Goldman Sachs and Morgan Stanley struggled after William Blair analysts said the stocks are attractive but cut its second-quarter earnings forecast on both.

Treasurys gained after a strong auction of two-year notes. The $40 billion sale fetched a high yield of 0.738 percent and the bid-to-cover ratio was 3.45.

Auctions of 5-year and 7-year notes are expected in the next two days, respectively.

The dollar rose and the yuan slipped after Chinese state-owned bank snapped up dollars in what some analysts said may be another way for the Chinese central bank to keep the currency's appreciation in check. This came after weekend news that China planned to loosen its peg on the yuan to the dollar, a move that had initially given stocks a boost.

The Federal Reserve's Open Market Committee begins its two-day policy meeting Tuesday, issuing its latest pronouncement on interest rates and the economy Wednesday at around 2:15 pm New York time.

The Fed is expected to keep its key policy rate—the federal-funds target rate, at record low near zero to revitalize the economy, a decision the central bank has maintained since December 2008.

On the earnings front, Walgreen tumbled after the drugstore chain reported a weaker-than-expected profit.

Rival Rite Aid is expected to report earnings on Wednesday in addition to Nike and Bed Bath & Beyond .

Earthlink filed a petition with the FCC to block the planned merger of Comcast and NBC Universal (NBC is the parent company of CNBC; both are owned by GE ). Earthlink says the deal would be anti-competitive.

AMR shares skidded after a report said the FAA had found cracks in three American Airline planes, which were made by Boeing .

This Week:
TUESDAY: Primary runoff elections; Earnings from Adobe after the bell
WEDNESDAY: Weekly mortgage apps; new home sales; weekly oil inventories; 5-yr note auction; FOMC interest rate decision; Galleon hearing; Earnings from Nike and Bed Bath & Beyond
THURSDAY: Durable goods orders; weekly jobless claims; 7-yr note auction; iPhone 4 on sale; Yahoo shareholders meeting; Earnings from Lennar, Oracle and Research In Motion
FRIDAY: Final read on Q1 GDP; corporate profits; consumer sentiment; XTO shareholders meeting on Exxon buyout; Earnings from KB Home

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