Stocks sustain losses
Investors consider falling oil prices, Bernanke's comments, factory orders report, and news about GM and Lehman.
NEW YORK (CNNMoney.com) -- Stocks tumbled Tuesday, as investors eyed reports that Lehman Brothers may need to raise more capital amid the credit market fallout and Federal Reserve Chairman Ben Bernanke's hints that the central bank will stop cutting interest rates.
The Dow Jones industrial average (INDU) lost just over 100 points, or 0.8%. The broader Standard & Poor's 500 (SPX) index lost 0.6% and the Nasdaq composite (COMP) lost 0.4%.
The Dow struggled in the morning on weakness in select stocks, while the S&P 500 and Nasdaq had gained on the day's economic news and Bernanke's comments on the economy and the dollar.
But stocks tumbled in the afternoon, with the Dow losing as much as 150 points before erasing some of those losses near the close.
The turnaround in the afternoon was a matter of the market reassessing the morning news and deciding it was negative, said Art Hogan, chief market analyst at Jefferies & Co.
Oil prices slumped more than $3 a barrel, on the rallying dollar. That oil selloff dragged on oil services stocks, including ExxonMobil (XOM, Fortune 500) and Chevron (CVX, Fortune 500). Meanwhile, the talk about Lehman Brothers (LEH, Fortune 500) dragged on financial stocks, with the sector falling for the second session in a row.
Financial stocks had dipped Monday, after S&P cut its debt rating on several banks, and Wachovia and Washington Mutual announced management shakeups.
Hogan said that between the financial and energy sectors alone, almost 40% of the S&P 500 was under pressure, and with little strength in tech to counter it, the major gauges were slipping.
"In the short term, if we continue to see a pullback in the price of the barrel of oil and rise in the dollar, that would be positive for the marketplace," Hogan said.
Short of that, however, stocks are likely to remain rangebound and choppy, he said.
Thursday brings the revised reading on first-quarter productivity, the ISM reading on the services sector of the economy and a report from payroll services firm ADP on private sector employment in May. The broader April non-farm payrolls report is due Friday.
GM to shut plants: The automaker said it will close four pickup and SUV plants by 2010, saying that higher fuel prices have impacted consumer preferences for vehicles. General Motors (GM, Fortune 500), a Dow component, also said it plans to make more fuel-efficient vehicles.
Separately, GM said May North American vehicle sales fell 27.5%, topping forecasts.
Among other automakers reporting May sales Tuesday, Ford Motor (F, Fortune 500) said overall sales dropped 16%.
Lehman could raise more cash: The bank may need to raise an additional $3 billion to $4 billion to strengthen its balance sheet, the Wall Street Journal reported Tuesday, citing sources. The news could be announced in mid-June in conjunction with the bank's earnings report.
Separately, State Street Corp. (STT, Fortune 500) said it is raising $2.5 billion to protect its balance sheet against losses related to the subprime mortgage market fallout. (Full story.)
In other company news, Toll Brothers (TOL, Fortune 500) reported a fiscal second-quarter loss that was nonetheless narrower than what analysts were expecting, sending shares higher.
Better reading on the economy: Factory orders rose 1.1% in April after increasing 1.5% in March, the government reported. Sales were expected to drop 0.1% in the month.
Bernanke on growth: The Fed chairman said the economy remains under pressure, but implied that the central bank is unlikely to cut interest rates again soon, due to rising oil prices and other inflationary pressures. Bernanke was speaking to the International Monetary Conference in Barcelona, Spain, via satellite. (Full story.)
Oil prices fall: U.S. light crude oil for July delivery fell $3.45 to settle at $124.31 a barrel on the New York Mercantile Exchange.
Gas hits new record: The national average price for a gallon of regular unleaded gas rose to $3.978, AAA said, from $3.975 Sunday, the 26th record high in 27 days. (Full story.)
Other markets: The dollar rose versus the euro and the yen, building on recent gains after Fed Chairman Bernanke made comments in his speech regarding keeping the U.S. currency strong.
Treasury prices rose, lowering the yield on the 10-year note to 3.90% from 3.96% late Monday. Bond prices and yields move in opposite directions.
COMEX gold for August delivery fell $11.50 to settle at $885.50 an ounce. 
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