Dow Logs 8-Day Loss, S&P Negative for Year

Dow

11,866.62

-265.87

-2.19%

By: JeeYeon Park

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.


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.

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 high amid 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."