Brutal day on Wall Street

Dow tumbles 416, biggest one-day point loss since 2001, as investors eye China, thwarted attack on Cheney, drop in durables.

By Alexandra Twin, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Stocks tumbled across the board Tuesday, after declining markets in China and Europe and a steep drop in durable goods orders triggered a massive selloff on Wall Street.

The Dow Jones industrial average (down 416.02 to 12,216.24, Charts) tumbled 416.02 points, its biggest one-day point loss since the day the stock market reopened after the Sept. 11th attacks. On that day, the Dow lost 684.81 points.

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A worried trader eyes a monitor on the floor of the New York Stock Exchange, Tuesday, Feb. 27, 2007.
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On a percentage basis, the Dow lost about 3.3 percent. The blue-chip barometer has now fallen for five sessions straight.

The broader S&P 500 (down 50.33 to 1,399.04, Charts) index fell 3.5 percent and saw its biggest one-day percentage loss in nearly four years. The S&P 500 also slumped for the previous four sessions.

The Nasdaq (down 96.66 to 2,407.86, Charts) composite tumbled about 3.9 percent and saw its biggest one-day percentage loss since Dec. 9, 2002, according to early tallies.

The Russell 2000 (down 31.03 to 792.66, Charts) small-cap index lost almost 4 percent.

Trying to limit the declines, the New York Stock Exchange said it imposed trading curbs as of 1:03 p.m. ET, around the time the Dow slipped 200 points, CNN confirmed.

Treasury bonds rallied as investors sought a safe place to park their money while the dollar fell. Oil prices inched higher and gold prices fell.

Here's a look at what was moving near the close.

Chinese stocks slumped 9 percent Tuesday - the worst one-day selloff in a decade - on concerns that the government would interfere to cool the speculation that drove the Shanghai market up nearly 130 percent last year. (Full story).

Other Asian markets slumped in tandem. European shares also tumbled.

"The selloff demonstrates somewhat starkly the inter-connectedness of stock markets around the world," said Hugh Johnson, chief strategist at ThomasLloyd Global Asset Management.

"Markets can decline in one seemingly isolated part of the world and that decline can be transmitted to other parts of the world through the psychology," he said.

The slump in world markets exacerbated concerns that Wall Street is due for a selloff after a nearly eight-month rally that has sent the Dow industrials to record highs and the Nasdaq and S&P 500 to more than 6-year highs.

Market veterans have been looking for a stock selloff for some months now due to the combination of slowing economic and earnings growth expected this year, said Harry Clark, CEO at Clark Capital Management.

Although some analysts have been calling for a pullback of about 10 percent for the market, Clark said a smaller drop is more likely.

"We'll probably see a decline of about 4 or 5 percent and then it will be done," Clark said, noting that a lot of the selling will be washed out within the next week or so as the shock wears off.

ThomasLloyd Global's Johnson agreed that the selling should ease. But markets will "continue to be vulnerable to big decisions by big policy-makers in big places like China," he said.

News that Vice President Dick Cheney was the apparent target in a Taliban suicide bombing attack in Afghanistan added to the day's worries.

A morning report in the United States showed a steeper-than-expected decline in durable goods orders in January, adding to concerns about slowing economic growth.

Slowing growth ultimately drags on corporate profits, making stocks more expensive relative to earnings.

For more on the day's economic news including the latest on the housing market, click here.

All 30 components of the Dow Jones industrial average fell.

The drop in durables dragged on blue chips such as Dow components Alcoa (down $1.57 to $33.79, Charts), Caterpillar (down $2.43 to $64.83, Charts), General Motors (down $1.82 to $32.15, Charts) and Boeing (down $1.73 to $87.20, Charts).

Other losers included the blue-chip average's technology components, IBM (down $2.95 to $93.96, Charts) and Hewlett Packard (down $1.37 to $38.92, Charts).

Apple Computer (Charts) declined after it said late Monday that its Apple TV will be delayed until mid-March.

Nordstrom (down $4.30 to $52.30, Charts) slipped after reporting weaker-than-expected fourth-quarter financial results.

Market breadth was negative On the New York Stock Exchange, decliners trounced advancers by almost six to one on volume of 2.31 billion shares. On the Nasdaq, losers beat winners by more than nine to one on volume of 3.05 billion shares.

In addition to the durable goods report, the morning brought the latest on housing and consumer confidence.

Existing home sales grew at a faster-than-expected pace in January, in a report that also showed the pace of sales dropped from a year ago. The median price of a home sold in January was down versus a year ago. (Full story).

Another report showed that consumer confidence saw a surprise rise in February versus forecasts for a drop.

Investors were also still digesting Monday reports that former Federal Reserve Chairman Alan Greenspan says the economy could fall into a recession by the end of 2007. (Full story).

Tuesday kicked off a busy week for economic news, with reports due later in the week on fourth-quarter gross domestic product growth, new home sales, personal income and spending and the manufacturing sector.

Also impacting the market Tuesday: news of a suicide bombing attack at the entrance to the main U.S. military base in Afghanistan during a visit by Dick Cheney. The attack killed at least 23 people. (Full story).

In Iraq, a bomb that exploded near a soccer field killed 18 children and wounded at least 25 others.

Treasury prices rallied as investors sought safety, lowering the yield on the benchmark 10-year note to 4.55 percent from 4.62 percent late Monday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and the yen following the durable goods orders report.

U.S. light crude oil for April delivery rose 41 cents to $61.80 a barrel on the New York Mercantile Exchange. The price of oil rose for the last four sessions.

COMEX gold for April delivery fell $3.10 to $686.70 an ounce.


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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.