Investors channeled cash into less risky assets as doubts resurfaced within the political will of Italy and Greece to push through tough budget measures so that as Germany hardened its stand against providing more aid. The worries within the European debt crisis renewed fears that the global economy could fall under recession.
The S&P 500 is now down 14. 5% through its highest point in 2011, reached at the end associated with April. Though investors have periodically taken heart from signs that Europe has carved out a plan to cope with its festering crisis, confidence has been repeatedly walloped every time there's a development showing that the problems have not been solved.
"We have a shot at trading the S&P under 1, 100 once again, " said Nick Kalivas, an equity index analyst at MF Worldwide in Chicago. "I don't sense that people are really likely to defend the market until something like that occurs. "
An identical pattern of fractured confidence exists in bank stocks. Major US banks were one of the biggest decliners on Tuesday, with the KBW Bank index away nearly 2%.
Late on Friday, the Federal Housing Finance Company sued 17 large US banks over subprime mortgage-backed bonds, compounding fears about the healthiness of the sector.
JPMorgan and Bank of America, both subjects from the suit, fell more than 3% on Tuesday.
The CBOE Volatility Catalog, or Vix, a measure of expected market turbulence, posted its biggest gain in nearly fourteen days, climbing 9. 4% to 37. 08.
"Right now there is really a tremendous amount of uncertainty, " said Michael Sheldon, chief marketplace strategist at RDM Financial in Westport, Connecticut. "There is a good chance that we are in a bear market. "
The actual Dow Jones industrial average dropped 100. 96 points, or 0. 90%, in order to 11, 139. 30. The Standard & Poor's 500 Index dropped 8. 73 points, or 0. 74%, to 1, 165. twenty-four. The Nasdaq Composite Index lost 6. 50 points, or 0. 26%, in order to 2, 473. 83.
Traders are monitoring lows set by major global indexes throughout the selloff in the first half of August. So far, just Germany's DAX, down nearly 25% this year, and Japan's Nikkei possess fallen below those levels.
The S&P 500 hit a 2011 low of just one, 101 on August 9.
European shares extended losses on Wednesday, after falling more than 4% on Monday, hitting their lowest close in a lot more than two years on worries the Eurozone debt crisis was going down hill. The PHLX Europe sector index slumped 3. 5%. US-listed gives of Credit Suisse fell 12. 9% to $23. 84.
Gold stocks got a lift as the buying price of gold jumped to a record high above $1, 920 after Switzerland pegged its currency to the euro in order to prevent its rapid appreciation in an extended spat of safe-haven purchasing. The precious metal then retreated 2% from that level because investors took profits.
The Arca Gold Bugs index, which steps the performance of 16 US-listed gold miners, rose 0. 6%. Eldorado Precious metal Corp was the biggest%age gainer, up 2. 4% to $21. thirty six.
The Financial Times reported several big US banks, in speaks with state officials on settling claims of improper mortgage methods, were offered a deal to limit legal liability in return for any multibillion-dollar payment.
Several brokerages including Nomura cut their price focuses on on big lenders. Bank of America Corp lost 3. 6% in order to $6. 99 and JPMorgan Chase & Co fell 3. 4% in order to $33. 44.
Among gainers, Sunoco Inc rose 5. 3% in order to $38. 03 after the energy company said it plans to exit its refining business and concentrate on its logistics operations.
Packaging company Temple-Inland Inc jumped 25% in order to $30. 85 after International Paper Co agreed to buy this for $32 per share. International Paper rose 8. 9% in order to $27. 77.
Trading volume was lower than usual at 7. 9 billion shares about the New York Stock Exchange, the American Stock Exchange and Nasdaq.
Decliners beat advancers by nearly than three-to-one about the New York Stock Exchange. On Nasdaq, decliners beat advancers through about two-to-one.