Stocks Taper Off; Dow Drops Triple Digits

NEW YORK ( TheStreet) - U.S. stock losses accelerated into Tuesday's closing bell following a jarring and jerky trading session, as investors struggled to get a feel for global growth prospects after ISM manufacturing reading for May beat estimates but Chinese manufacturing activity during the same month fell short of expectations.

The Dow Jones Industrial Average, which traded in both positive and negative territory today, finished 113 points lower, or 1.1%, to 10,024. The S&P 500 lost 19 points, or 1.7%, to 1071 and the Nasdaq tumbled 35 points, or 1.5%, at 2222.

U.S. stocks trailed early in the morning after sluggish economic news from China and Europe, but turned higher after domestic economic data showed better-than-expected results in construction and in the factory realm. But stocks continued trading in a volatile fashion for the entire day, just before a steep sell-off heading into the closing bell.

"I think there is concern over how Europe and Asia is going to react," said Marc Pado, U.S. market strategist at Cantor Fitzgerald. "If you look at the euro, the market is very concerned about the relationship between the euro and the dollar"

"But even when you got these little blips up today, if you look at the groups that led the earlier rally, one of the things that sticks out is that these were very defensive groups," he added, citing food as one such sector, while materials and energy weighed on the major averages. "We're succumbing at end of day with the realization that we'll wake up tomorrow with Asia and Europe down in the morning. Whether they recover in the afternoon or not, you know what you're waking up to in the market. They see our market sell-off, and start selling. It's a vicious circle."

"We haven't found a catalyst, but we just can't seem to focus on the domestic issues when overall the concern is on the international market," Pado concluded. "We just could not get a footing even on positive economic news. No one expects Europe to get better tomorrow, but we're just waiting for the it to get less worse."

Overseas, Hong Kong's Hang Seng lost 1.4%, and Japan's Nikkei slipped 0.6%. The FTSE in London was lost 0.5%, and the DAX in Frankfurt rose 0.3%.

The Economy

The Department of Commerce said construction spending jumped 2.7% in April, far exceeding economists' expectations for a 0.2% uptick. In March, spending grew by an upwardly-revised 0.4%, compared with an initially reported increase of 0.2%.
construction

The Institute for Supply Management's survey of purchasing managers reported a May reading of 59.7, which fell from April's level of 60.4. May's figure was slightly stronger than the reading of 58.9 that economists had been expecting.

Company News

Shares of BP ( BP) plunged 15% after the company said over the weekend that its "top kill" strategy to stop the oil leak in the Gulf of Mexico failed. U.S. Attorney General Eric Holder also said his department has begun probing BP, investigating for conduct that could lead to criminal and civil complaints.

Oil-related stocks got hit hard by the news, making it the weakest sector of the trading session, as the NYSE Arca Oil index fell 5.1% and the Philadelphia Oil Service Sector index tumbled 7.5%.

Shares of Kraft ( KFT), Johnson & Johnson ( JNJ) and Wal-Mart ( WMT) were the leading advancers on the Dow, while Alcoa ( AA), DuPont ( DD), and JPMorgan Chase ( JPM) led the blue-chip average lower.

On the New York Stock Exchange, NL Industries ( NL), WSP Holdings ( WH) and Icahn Enterprises ( IEP) made strong gains, unlike Canadian Natural Resources ( CNQ), Anadarko Petroleum ( APC) and Warner Music Group ( WMG).

Hewlett-Packard ( HPQ) said it will cut an additional 9,000 positions and take a $1 billion restructuring charge. That comes on top of the company's previously-announced elimination of 24,600 jobs and charges of $1.7 billion. Shares dropped 0.9%.

Caterpillar ( CAT) appears to be interested in bolstering its railroad business. The heavy-equipment maker acquired electric-diesel locomotive manufacturer Electro-Motive Diesel for $820 million in cash from a pair of private-equity investors. The stock fell 2.5%.

Shares of Apple ( AAPL) rose 1.5%, to $260.83 after the company said sales of its new iPad device topped 2 million in less than 60 days since its launch on April 3. On Friday, the iPad was made available to customers in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the U.K. Apple received separate price target increases from Barclays and UBS.

Security concerns prompted Google ( GOOG) to begin phasing out the internal use of Microsoft's ( MSFT) Windows operating system, according to the Financial Times.

American International Group ( AIG) refused to change the terms of the $35.5 billion sale of its Asian unit, AIA, to the U.K.'s Prudential ( PUK). AIG's stock lost 3.2%, to finish at $34.25.

Commodities and the Dollar

Crude oil for July delivery lost $1.39 to settle at $72.58 a barrel.

Elsewhere in commodity markets, the August gold contract went ahead by $11.90, at $1,226.90 an ounce.

The dollar was trading higher against a basket of currencies, with the dollar index up 0.3%.

Treasuries

The benchmark 10-year Treasury rose 12/32, decreasing the yield to 3.259%.

The two-year note was adding 1/32, lowering the yield to 0.766%. The 30-year bond gained 23/32, dropping the yield to 4.176%.

--Written by Melinda Peer and Sung Moss in New York.

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