NEW YORK (TheStreet) -- Stocks sunk Tuesday as Europe's latest strategy to contain its debt crisis drew some skepticism from investors and the government's estimate of third-quarter economic growth was revised lower.
Dow Jones Industrial Average
closed down 54 points, or 0.5%, at 11,494. The blue-chip index was off as much as 108 points at its worst point. The
fell 5 points, or 0.4%, to finish at 1188, and the
slipped 2 points, or 0.1%, to settle at 2521.
The Dow has now fallen in four of the past five sessions, losing 5% over that span and sliding into negative territory for 2011.
During Tuesday's session, the International Monetary Fund announced plans to provide short-term liquidity lifelines that provide credit to certain countries for six months. The quota each country can receive depends on how much it already contributes to the IMF, however, raising questions of how long this latest fix for Europe will last. The euro was gaining 0.19% after the news but borrowing costs in Europe were still high. Spain's 10-year debt was yielding 6.6% and Italy's was yield 6.8%.
Also impacting sentiment were the minutes from the Fed's last meeting in early November. The central bank considered further easing of monetary policy, according to the notes, although, as expected, only "a few members" think additional action is needed. After the release of the report, the ten-year Treasury bond was up 7/32, diluting its yield to 1.931%.
Investors have been paying particular attention to technical trends for the S&P 500 of late. Lou Brien, a market strategist at DRW Trading, noted that the index's 50% decline to its early October low is a fraction of a point above Monday's low just above 1183. If the index breaks that level, more selling could follow.
Hurting stocks was a disappointing estimate of U.S. economic growth in the third quarter. The Bureau of Economic Analysis said its second read on third-quarter gross domestic product growth came in at 2%, down from its prior estimate of 2.5% growth. A poll of economists by
expected no change to the original estimate.
The report was disappointing but it was something of an exception of late, given that data on jobless claims and the housing market has started to improve.
"Don't forget that the economic data is still decent," said Marc Pado, strategist with Cantor Fitzgerald., who explained that most of the cut in GDP came from a drop in 'inventories.'
The Dow's biggest decliners on Monday were
Bank of America
( KFT) and
were leading the gains.
Trading volume was light ahead of the Thanksgiving holiday weekend. By the close, 3.9 billion shares changed hands on the New York Stock Exchange and 1.8 billion on the Nasdaq.
Stocks dropped sharply on Monday as U.S. legislators failed to reach a debt reduction deal as planned. However, ratings agencies Standard & Poor's and Moody's reaffirmed U.S. creditworthiness late yesterday, dispelling some fears that an imminent downgrade might spark a global selloff similar to the one in early August. Long-term concerns about
an increasing debt-to-GDP ratio still remain.
In corporate news,
Bank of America
shares fell 2.2% following reports from
The Wall Street Journal
that the bank may face enforcement action from regulators if it cannot bolster its capital and operations.
first-quarter sales fell 1% to $2.16 billion because of lower promotional spending and a drop in volume. Campbell Soup's first-quarter earnings fell to $265 million from $279 million a year ago. The company's per-share earnings of 82 cents a share topped analysts' estimates of 79 cents. Shares tumbled 5.3%.
, the computer and printer maker, said adjusted earnings per share fell 12% from last year to $1.17 per share. Adjusted net revenue for the quarter ended in October dropped 3% to $32.30 billion. Analysts were expecting profit of $1.13 a share on sales of $32 billion. Shares were off 0.8%.
said fiscal fourth-quarter profit fell 3%.The maker of Spam said net income fell to $117.3 million, or 43 cents a share, from $121.1 million, or 45 cents, last year. Analysts were expecting a profit of 42 cents a share. Shares were off 0.03%.
Networking equipment company
blew past Wall Street's expectations in its fiscal fourth quarter, reporting adjusted earnings of $79 million, or 16 cents a share. Revenue was $550 million, up 9% compared to the last quarter but virtually flat from the same quarter last year. Analysts were calling for a profit of 10 cents a share on revenue of $527.4 million. Shares gained 13%.
Online movie rental company
says it is raising an additional $200 million through the sale of zero coupon convertible notes. The buyer of the notes, Technology Crossover Ventures, will have the right to nominate one person to Netflix's board. Shares fell 5.4%.
The December gold contract settled up $23.80 to $1,702.40 an ounce. January crude oil futures were up $1.09 to $98.01 a barrel.
The U.S. dollar was trading sideways against a basket of currencies, with the U.S. dollar index down 0.12%.
Earlier, London's FTSE fell 0.3% Tuesday, and Germany's DAX lost 1.22%. Overnight, Asian stocks closed mixed. Japan's Nikkei Average was down 0.40%, and Hong Kong's Hang Seng was up 0.14%.
--Written by Chao Deng and Andrea Tse in New York.