Stocks fell sharply Tuesday as doubts about China's growth and a disappointing U.S. consumer-confidence reading rattled an already jittery market.
The Dow Jones Industrial Average shed 268.22, or 2.7 percent, to close at 9,870.30. The Nasdaq and S&P 500 both lost more than 3 percent, with the S&P falling to its lowest level in eight months.
Industrials took the biggest hit amid worries about the global recovery. Boeing and Alcoa were the biggest drags on the Dow, each down more than 6 percent.
The CBOE volatility index, widely considered the best gauge of fear in the market, spiked more than 20 percent to above 35.
The Conference Board reported its leading indicators for China rose 0.3 percent in April, sharply lower than the 1.7-percent increase it had initially reported. And the IPO for Agbank, China's third largest bank, priced lower than expected at HK$2.88 to HK$3.48 (37 to 39 U.S. cents).
"China is the biggest concern," said Lawrence Creatura, manager of the Federated Clover Small Value Fund. "Global growth expectations had already taken a body blow when Europe stuttered. And, if China, the last bastion of growth, is going to falter, tomorrow could look a little worse than today from an earnings perspective."
Financials were also hammered amid increased worries about the European debt crisis as bank repayments come due to the European Central Bank this week. European banks must repay 442 billion euros ($545.5 billion) in emergency loans to the ECB on by Thursday.
House and Senate lawmakers appeared to agree on how to fund the financial-reform bill, which would end an impasse over the $19 billion in new taxes and fees.
Citigroup shares ended down 6.8 percent. The stock was briefly halted by the new single-stock circuit breaker due to an odd trade, which, at one point, sent the stock down 17 percent.
Techs skidded after a disappointing outlookfrom chip maker Micron Technology .
Shares of Micron were down more than 10 percent after the memory-chip maker delivered decent third-quarter results but reported prices have been stable and sometimes declined in the last month, spurring concerns about the current quarter. Oppenheimer analyst Gary Hsueh said he would've expected double-digit percent growth for the current quarter.
The Philadelphia Stock Exchange semiconductor index was off nearly 5 percent.
Investors were making a flight to safety, with consumer staples stocks the day's best performers and gold topping $1,240 an ounce.
Treasury prices rose, sending yields down sharply: The 2-year yield hit a record low, while the yield on the benchmark 10-year note broke below 3 percent.
In U.S. economic news, the S&P/Case-Shiller home-price index for 20 metropolitan areas rose 0.4 percent in April amid a final push before the tax credit expired, after sliding 0.2 percent in March. Economists surveyed by Reuters had expected a 0.1-percent decline.
And the Conference Board reported its gauge of consumer confidence fell to 52.9 in June from 62.7 in May, well below the consensus, which called for 62.5.
Verizon got a quick pop but ultimately finished lower following a report in Bloomberg that the company may start selling an Apple iPhone using Verizon as the provider as early as January. Verizon said it would neither confirm nor deny the report.
Tesla Motors' shares jumped 40 percent on their debut after the IPO priced at $17 a share last night, above the planned $14-$16 range. A day before, the electric-car maker increased the number of shares for the IPO by 20 percent to 13.3 million.
Google will stop automatically redirecting users of its Chinese search engine to its Hong Kong web site, as it tries to avoid a conflict with the Chinese government that could result in losing its license to operate in China.
And Cisco is planning to enter the tablet-computer market, developing a model for business customers.
Barnes & Noble reported a larger quarterly loss for its fourth quarter, compared the same quarter last year, and forecasts another loss for the current quarter. Another earning report of note will come after the closing bell this afternoon, when food-maker General Mills reports its latest quarterly numbers.
BP was among the only stocks higher today, up more than 2 percent. Tropical Storm Alex is set to strengthen into a hurricane today, which could impact efforts to contain the massive Gulf oil spill.
US-traded shares of generic drug maker Teva were also higher, up about 1 percent, after Bayer withdrew one lawsuit against the Israeli company over alleged paten infringement's on Bayer's oral contraceptive Yaz. However, Teva said it will still continue to pursue some charges against the company.
Volume was slightly higher than usual, with 1.6 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, nearly 9 to 1.
TUESDAY: Consumer confidence; Tesla shares debut
WEDNESDAY: FCIC hearing; weekly mortgage apps; ADP employment survey; weekly crude inventories; Fed's Lockhart speaks
THURSDAY: Weekly jobless claims; ISM manufacturing index; construction spending; pending-home sales; June auto sales
FRIDAY: June jobs report; factory orders
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