Global Unrest Puts Stocks in a Dive
By KRISTINA PETERSON
NEW YORK—The stock market plummeted Tuesday in its biggest drop of the year as escalating tensions in the Middle East and North Africa sent oil prices soaring.
The Dow Jones Industrial Average tumbled 178.46 points, or 1.4%, to 12212.79, its biggest point and percentage drop since Nov. 16.
The Standard & Poor's 500-stock index fell 27.57, or 2.1%, to 1315.44, the measure's biggest point and percentage drop since Aug. 11, 2010.
Oil Prices Spiked and Stocks Tumbled on concerns about Libya, after that nation closed its ports blocking oil exports. Paul Vigna has details. Plus, Gadhafi speaks and how cell phone usage affects your brain.
Brent rose and U.S. crude oil reached a 2-1/2 year high on concerns the revolt in Libya could spread to other major oil producers as companies suspended operations and ports were disrupted. Video courtesy of Reuters.
.Wal-Mart Stores weighed on the Dow, sliding $1.71, or 3.1%, to $53.67, after the retailer's fiscal fourth-quarter profit rose 27%, capitalizing on strength in its international business, but its U.S. operations continued to struggle. Wal-Mart posted its seventh consecutive quarter of lower U.S. same-store sales, and fourth-quarter revenue fell short of analysts' expectations.
Bank of America fell 57 cents, or 3.9%, to 14.18, after saying its credit-card subsidiary was restating eight quarters of reports to regulators because it took a $20.3 billion write-down because of deteriorating credit and new regulations over the past two years. Alcoa was also weak, tumbling 74 cents, or 4.3%, to 16.54.
Energy components were among the measure's few stocks to gain Tuesday, as oil prices surged. Chevron gained 1.60, or 1.6%, to 100.32, while Exxon Mobil rose 94 cents, or 1.1%, to 85.44.
The Nasdaq Composite sank 77.53 points, or 2.7% to 2756.42.
Global stock markets tumbled Tuesday as violence increased in Libya, a major oil-producing state. Libyan leader Col. Moammar Gadhafi publicly defied protesters seeking to end his rule, vowing to remain in the country "until the end" in a televised speech that showed his determination to cling to power Tuesday, as reinforcements of loyal armed military units tightened their hold around the capital. Libyan traders said the country had shut all ports, which would reopen in two to three days.
U.S. markets had been closed Monday for the Presidents Day holiday. Crude-oil prices jumped as unease over the turmoil in Libya and parts of the Middle East mounted. Libya produces 1.8 million barrels of oil daily, and its 41 billion barrels of proven reserves represent more than 3% of global supplies. Nymex oil prices for March delivery surged 8.6% over Friday's close, adding $7.37 a barrel in the biggest one-day dollar gain in more than two years.
.Investors said the stock market had been ready for a correction, as major stock indexes had climbed steadily to reach 2½-year highs on Friday. The geopolitical tensions in the Middle East and North Africa gave nervous traders reason to retreat, said Liz Miller, president of Summit Place Financial Advisors.
"The unrest in the Middle East has ended up to be that trigger, but any number of things could've been that trigger," she said. She cautioned that, if oil prices do remain elevated, "that's a real concern in an economy that seemed to be gaining some strength."
But Tuesday's tumble came as a relief to some participants unnerved by the market's recent unrelenting climb, even in the face of earlier unrest in Egypt.
"When the market starts shrugging off geopolitical issues and ignoring it completely, it's cause for concern," said Jennifer Ellison, principal at Bingham, Osborn & Scarborough. "It's a positive that we're getting some sort of reality check in the market here."
Asian markets suffered sharp losses, also hurt by a major earthquake in New Zealand and a move by Moody's Investors Service to cut the outlook on Japan's "Aa2" rating to "negative" from "stable."
Oil Rises 8.6% on Libya Violence
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.Demand for Treasurys climbed, sending yield on the 10-year note down to 3.465%. The dollar strengthened against the euro but weakened against the yen. The euro was at $1.3655, down from $1.3675 late Monday.
Volatility jumped, as the CBOE Market Volatility Index surged more than 30% at its highest point in the day, its biggest one-day climb of the year.
Among stocks in focus, Home Depot slipped 39 cents, or 1%, to 38.09, even after the home-improvement chain's fourth-quarter profit climbed 72% from year-earlier levels, boosted by heavy demand for snow-removal gear. Home Depot provided 2011 guidance at or above the views it gave in December and boosted its dividend by nearly 6% while reiterating its goal to raise the payout every year.
Mentor Graphics climbed 95 cents, or 6.5%, to 15.47, after billionaire investor Carl Icahn offered to buy the chip-design software company for $1.91 billion.
World stocks fell Tuesday as a growing revolt in Libya drove oil prices to 30-month highs.
.Dynegy lost 12 cents, or 2%, to 5.89, after it announced that Chief Executive Bruce Williamson will resign and named David Biegler interim CEO.
Forest Laboratories fell 1.43, or 4.2%, to 32.90, after saying it will buy Clinical Data for at least $898.7 million, as it looks to capitalize on Clinical Data's newly approved Viibryd antidepressant drug. Shares of Clinical Data tumbled 2.69, or 7.9%, to 31.21.
In U.S. economic data, a reading of U.S. consumer confidence hit a three-year high, reaching 70.4 in February, well above the 66 expected by economists. The S&P Case-Shiller 20-city home-price index fell 2.4% year-over-year, slightly more than the 2% drop economists surveyed by Dow Jones Newswires had predicted. The Federal Reserve Bank of Richmond saw mixed economic activity.
Write to Kristina Peterson at email@example.com