Stocks extend slide to 5 days
Dow Jones closes at lowest level since Feb. 2
NEW YORK – The stock market extended its longest and deepest slump of the year Tuesday, caught between a recurring nightmare of European debt and the beginning of uncertain corporate earnings reports at home.
The Dow Jones industrial average fell 213.66 points, its biggest decline of the year and third triple-digit loss in four days. It closed at 12,715.93, its lowest since Feb. 2.
A five-day losing streak has shaved about 550 points off the Dow, more than half what it gained from January through March.
In Europe, concern about the financial health of Spain intensified, and borrowing costs for both Spain and Italy rose considerably. Spain’s borrowing costs crept closer to levels that forced other countries to seek bailouts.
European markets sold off while Wall Street was still sleeping. The main stock indexes in Spain and France closed down about 3 percent, the equivalent of a 400-point drop in the Dow.
“They’ve managed to put a Band-Aid on the debt crisis, but there’s really no solution,” said Colleen Supran, a principal at the investment adviser Bingham, Osborn & Scarborough in San Francisco. “And Spain is a much bigger problem than Greece.”
Jeffrey Cleveland, senior economist at Payden & Rygel in Los Angeles, compared the financial markets to a person coming off a sugar high – in this case, the bailout package for Greece put together late last year.
“It works for a few minutes, but eventually reality reasserts itself,” Cleveland said. “Nothing has been solved in Europe. People are paying attention to it now. They were able to ignore it for a little while.”
The losing streak began last Tuesday, when the Federal Reserve said it was worried about the strength of job growth and suggested it was not inclined to provide further help for the economy.
The Dow fell 204 points in three days. It fell 131 more on Monday, the first time investors could react to a report showing much weaker job growth in March than in the three previous months.
Then, on Tuesday, the National Federation of Independent Business reported a drop in its small-business optimism index, the first decline after six months of gains.
That report helped knock stocks down at the open, and with Europe to worry about, they sank all day.
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