US Market

U.S. stocks dropped sharply Tuesday amid fresh worries over the state of the economy, pushing the market to its longest losing streak in nearly three years and sending the Standard & Poor's 500-stock index to a 2011 closing low. The Dow Jones Industrial Average tumbled 265.87 points, or 2.19%, to 11866.62. All 30 Dow components finished in the red.

[Kick off your trading day with our newsletter]

The blue-chip index suffered its eighth consecutive decline, its longest since October 2008. It has lost more than 800 points during the skid, dating back to July 22. Tuesday's selloff steepened just before the closing bell. The Dow dropped more than 100 points in the final hour of trading. The Standard & Poor's 500-stock index shed 32.89 points, or 2.56%, to 1254.05, led lower by consumer discretionary and industrial stocks. All 10 sectors in the S&P 500 closed in negative territory. The technology-oriented Nasdaq Composite gave up 75.37 points, or 2.75%, to 2669.24.

Investors fretted even as President Barack Obama signed into law a bill raising the nation's debt ceiling. The focus has turned to weak growth plaguing the economy. Data Tuesday showed Americans cut spending by the most in nearly two years and saved at a faster rate during June, signs that underscored the economy's lack of vigor. The consumer-spending figures highlight another troubling aspect of the struggling recovery. Last week brought news that the U.S. economy barely grew in the first half of the year, and a report on Monday showed that manufacturing is shaky. Friday's employment report is expected to continue to show a stagnant labor market.

European Market

European stocks tumbled to a 10-month low Tuesday as gloomy U.S. economic data added to global growth concerns and as the sovereign-debt crisis returned to haunt Italy. The Stoxx Europe 600 index dropped 1.9% to close at 256.98, its third consecutive decline, as anxiety over the debt-ceiling deal in Washington was eclipsed by new concerns about the fragile U.S. recovery. The Stoxx 600 touched levels not seen since October 2010. Investors went from selling banks to cyclical stocks as U.S. consumers cut spending in June for the first time in nearly two years.

Switzerland's SMI index tumbled 4.1%, as the euro dropped to a record low below CHF1.10. The dollar also neared an all-time low as investors piled into the perceived safe-haven of the Swiss currency. Reinsurer Swiss Re AG fell 5.4%, while industrial group ABB Ltd. tumbled 4.6%. Heavyweight pharmaceutical companies Novartis AG and Roche Holding AG fell more than 4% each, while food group Nestle SA dropped 1.3%.

Meanwhile, sovereign-debt issues resurfaced, with bond yields for Spain's and Italy's government bonds soaring amid news reports that Italian officials would meet to discuss the turmoil in the markets that has pressured the country's bonds. And in Spain, Prime Minister Jose Luis Rodriguez Zapatero, who called early elections last week, postponed his vacation to keep a closer watch on the country's economic indicators. The FTSE MIB Italy index dropped 2.5%, with auto maker Fiat Industrial SpA falling 8.4% and dairy group Parmalat SpA shedding 2.7%.

The Spanish IBEX 35 index fell 1.9% to 9,140.90. One of the biggest losers within the Stoxx 600 was Danish jewelry maker Pandora AS, shares of which plummeted 65% after the group slashed its sales-growth forecast for the year. Another big decliner was Wacker Chemie AG, which fell 11% after the German chemicals company said higher raw-material costs weighed on second-quarter results. German retailer Metro AG echoed the theme of investors selling cyclicals, with shares down 7.5%. The German DAX 30 index dropped 2.3% to close at 6,796.75.

The French CAC 40 index fell 1.8% to close at 3,522.79. Shares of BNP Paribas SA fell 2.5%. And in London, the FTSE 100 index finished 1% lower at 5,718.39. Shares of Barclays PLC initially posted strong gains after the banking giant reported a 24% gain in first-half pretax profit, but then succumbed to late selling, ending the day down 0.1%.

Asian Markets

Asian stocks declined Tuesday as weak manufacturing data from the U.S. and other parts of the world added to concerns the global economy was slowing down and would affect the region's exporters. Japanese exporters also strained under the weight of a strengthened yen, which fueled speculation that Tokyo might intervene to curb the currency's rise.

The Nikkei Stock Average ended the day 1.2% lower at 9,844.59, while South Korea's Kospi fell 2.4% to 2,121.27. China's Shanghai Composite index dropped 0.9% to 2,679.26, Hong Kong's Hang Seng index declined 1.1% to 22,421.46 and Taiwan's Taiex gave up 1.3% at 8,584.72. The broad losses came as stocks on Wall Street ended lower Monday after the Institute for Supply Management's manufacturing purchasing managers' July index produced its lowest reading since July 2009. Equivalent data from Brazil and the U.K. also showed a contraction in July manufacturing activity.

Among companies dependent on overseas demand, shares of Hyundai Motor Co. tumbled 4.9% and Kia Motors Corp. lost 4% in Seoul, while Hon Hai Precision Industry Co. dropped 2.1% and Taiwan Semiconductor Manufacturing Co. fell 1.7% in Taipei.

Among Japanese exporters, Nikon Corp. and Nintendo Co. fell 2.8%, while Komatsu Ltd. lost 1.9%. A decline for Chinese banks weighed on stocks in Hong Kong as well as Shanghai. Shares of Industrial & Commercial Bank of China Ltd. dropped 3.5% following media reports that Goldman Sachs International had sold about 638 million Hong Kong-listed shares of the Chinese lender for a client. ICBC shares fell 0.9% in Shanghai. Meanwhile, shares of HSBC Holdings PLC climbed 1.2% in Hong Kong and provided support to the broader market a day after the company reported better than expected first-half results.

Commodities

Base metals closed mixed on the London Metal Exchange Tuesday as the markets continued to follow macro developments, although most metals managed to remain relatively stable amid a darkening economic picture. At the close, LME three-month copper was 0.3% higher at $9,679 a metric ton, while nickel fared the best, closing up 1.0% at $24,795/ton. Tin lost the most ground, closing 3.0% lower at $27,250/ton.

Crude oil futures prices fell for a third straight day, settling at the lowest level in more than a month on renewed concerns about the state of the U.S. economy following data showing Americans trimmed their personal spending by 0.2% in June, the biggest decline since September 2009.

Light, sweet crude oil for September delivery on the New York Mercantile Exchange settled down 1.2%, or $1.10, at $93.79 a barrel, the weakest level since June 28. September ICE Brent crude oil futures settled down 35 cents at $116.46 a barrel. Brent settled at a record premium of $22.67 a barrel to Nymex crude, topping by 2 cents the previous record set July 14.

Gold futures pushed to record highs as concerns about a slowdown in global growth and Europe's debt crisis spurred investor demand for the metal as a refuge. The most actively traded gold contract, for December delivery, climbed $22.80, or 1.4%, to settle at a record $1,644.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract climbed as high as $1,646.80 an ounce, a record intraday high.

More from IBT Markets:
Subscribe to get this delivered to your inbox daily
Follow us on Facebook.
Follow us on Twitter.