New York: The Dow Jones Industrial Average closed down over 200 points on Tuesday as concerns about a eurozone debt crisis prompted heavy losses in the financial sector.
The Dow fell 213.04 points (1.90%) to finish under the symbolic level of 11,000. It ended the day at 10,991.99 after an afternoon sell-off prompted by ratings downgrades for Greece and Portugal.
The Nasdaq composite shed 51.48 points (2.04%) to 2,471.47 and the Standard & Poor’s 500 index declined 28.34 points (2.34%) to 1,183.71.
Greece’s debt was downgraded to junk status on Tuesday as Portugal’s rating was also slashed -- but remained at investment level.
“There are concerns about contagion risk in the eurozone,” said Patrick O’Hare at Briefing.com.
“Greece’s fiscal problems, and the market’s lack of confidence in dealing with them, are spilling over to other countries seen as having a kindred fiscal spirit.”
Meanwhile O’Hare said a congressional hearing Tuesday where Goldman Sachs executives were facing a grilling “is a component of uncertainty that is also keeping buyers sidelined for the time being.”
The Dow’s financial component lost more than three percent of its value, as sweeping financial regulation was again discussed in Congress and amid the Goldman grilling.
While shares in Goldman were up over half a percent, shares in JPMorgan Chase fell 3.37% while shares in Bank of America fell 3.21%.
Strategist John Wilson at Morgan Keegan said the market is taking a breather from a strong eight-week rally. “We believe that stocks could use a pause,” he said. “The sell-offs recently have been short and reversed quickly. That’s not a bad thing, as it indicates a bullish bias.”
Stocks had started the day weaker but then saw a brief improvement as investors reacted to news of improvement in US consumer confidence, a key to spending and overall economic activity.
The latest monthly survey by the Conference Board showed the consumer confidence index for April stood at 57.9, up from 52.3 in March.
Scott Hoyt at Moody’s Economy.com said consumer confidence moved to “a new cyclical high” but was still at historically low levels.
But the market was unable to sustain upward momentum.
Among other stocks in focus, Ford slid 6.15% to 13.57 dollars as investors locked in gains despite the automaker’s announcement of a 2.1 billion dollar profit in the past quarter that topped expectations.
Shares in 3M rose 0.61% to 87.97 dollars after the maker of consumer and industrial products announced a jump in profits and an improved outlook.
Bonds gained amid the increased caution. The yield on the 10-year US Treasury bond dipped to 3.690% from 3.815% Monday while that on the 30-year bond fell to 4.574% against 4.673%. Bond yields and prices move in opposite directions.