Stocks Hit by Flight to Safety

NEW YORK (TheStreet) -- Stocks tumbled more than 1% Tuesday, and the Dow notched a triple-digit loss, as a plunge in July existing-home sales rekindled double-dip recession fears and spurred a flight to safe havens like bonds and gold.

Prices on the benchmark 10-year U.S. Treasury jumped, lowering the yield to 2.497% as investors sold off riskier assets. Gold for December delivery closed $4.90 higher at $1,233.40 an ounce at the Comex division of the New York Mercantile Exchange. Oil prices fell below $72 a barrel.

The Dow Jones Industrial Average lost 134 points, or 1.3%, to close at 10,040. The S&P 500 shed 15 points, or 1.5%, to finish at 1052, and the Nasdaq dropped by 36 points, or 1.7%, to 2124.

"We bounced off of the lows after the Dow fell to 10,000, so basically, we did find some support at the lower end of the trading range here, but markets are very concerned about the direction of the economy," said Peter Cardillo, chief market economist at Avalon Partners. "The home-sales plunge spooked the market that the economy might be headed for a double-dip recession even though we had [Chicago Federal Reserve Bank President] Charles Evans say today that he doesn't think a double-dip is likely. But he did acknowledge that weakness has increased."

Evans discussed the possibility of a double-dip recession in response to a question following his speech before the Indianapolis Neighborhood Housing Partnership this morning, according to Reuters.

"There's been a general decline in commodity prices, although gold rebounded and is even up for the day. The dollar was higher but is weaker now. Basically, what we're seeing is more and more risk aversion in the market," Cardillo said.

Overseas on Tuesday, Hong Kong's Hang Seng fell 1.1%, and Japan's Nikkei dropped 1.3%. The FTSE in London lost 1.5%, and the DAX in Frankfurt shed 1.3%.

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