Stocks Fall to Selling Pressure

Updated from 3:51 p.m. EST

Stocks in New York ended a choppy trading session Tuesday with losses, halting a two-day winning streak on Wall Street as investors swallowed the latest corporate earnings warnings and awaited word on an expected federal bailout of the U.S. auto industry.

The Dow Jones Industrial Average lost 242.85 points, or 2.7%, to 8691.33, and the S&P 500 gave back 21.03 points, or 2.3%, to 888.67. The Nasdaq, up some 34 points earlier in the session, ended down 24.4 points, or 1.6%, at 1547.34.

"It's really more of the same volatility that we've seen over the past several weeks," says Richard Sparks, senior equities analyst at Schaeffer's Investment Research. "It's the third 20% rally that we've seen in the S&P since mid-October, and the previous two have reversed fairly hard and led to new lows."

The two-day rally preceding Tuesday's downturn left the investment community debating what is and is not priced into the market. "It's very difficult to know," says Sparks, who characterizes the action for investors as a tug of war between what some say is a historic buying opportunity against the fact that we simply don't know where the bottom is.

"The problem is that [predictions for a turnaround] use historical context to frame their outlook, and I'm not so sure that this time isn't different than most bear markets we've been in," Sparks says.

While the solidification of an automakers' bailout seemed imminent Monday, the details remained unresolved Tuesday. Under proposed legislation submitted to the White House earlier in the week by Congress, the Big Three automakers -- Ford (F), General Motors (GM) and Chrysler -- would receive up to $15 billion in emergency aid.