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U.S. stocks lower, following global declines

NEW YORK - U.S. stocks fell sharply Tuesday, following a slump in global markets.

European markets slid after an early presidential vote was called in Greece, which investors feared could jeopardize the struggling country's bailout program. Greece's stock market suffered its biggest one-day loss since 1987. Stocks in China stumbled, interrupting a months-long surge, after regulators there tightened rules for lending.

The Dow Jones industrial average had its biggest drop in two months in early trading, falling as much as 222 points, or 1.3 percent. By 12:43 p.m. ET, the average was down 138 points, or 0.8 percent, to 17,715. The Standard & Poor's 500 index fell 11 points, or 0.6 percent, to 2,049. The Nasdaq composite lost seven points, or 0.1 percent, to 4,734.

The losses in Europe were deeper. France's CAC-40 closed down 2.6 percent and Germany's DAX lost 2.2 percent. Britain's FTSE 100 shed 2.1 percent.

The Athens stock exchange plunged 13 percent, its biggest one-day drop in almost 30 years. Investors are worried that the country might have to hold early general elections and that a left-wing opposition party would win. The Syriza party wants a cut to what Greece owes in bailout money, which could spook investors for years and derail the country's recovery.

Major Chinese oil and bank stocks fell, some by the daily limit of 10 percent allowed by regulators, after China's clearing house for securities trades raised the minimum rating for corporate bonds it would accept in exchange for short-term credit. That prompted concerns about the availability of financing for trades.

Tuesday's decline in Chinese stocks was a break from a buying frenzy that has pushed the Shanghai benchmark up 41 percent since June.

Hu Guopeng, an analyst at Founder Securities in Beijing, said the plunge in China's stock markets was a "technical correction" linked to the uncertainty about credit availability created by the change in collateral requirements. It "does not mean the end of the market boom," Hu said.

Teen apparel company Abercrombie & Fitch rose $1.66, or 6 percent, to $28 after the company said its CEO, Mike Jeffries, is retiring effective immediately. Jeffries was credited for transforming A&F in the 1990s, but the company has struggled to keep up with recent trends. The stock is down 14 percent this year.

U.S. benchmark crude rose 28 cents to $63.33 a barrel in New York. The contract plunged $2.79 on Monday to its lowest level in five years.

The dollar declined 1.7 percent against the Japanese currency to 119.16 yen. The euro rose 0.1 percent to $1.2391. In government bond trading, the yield on the 10-year Treasury note fell to 2.21 percent from 2.26 percent late Monday as prices rose.

More details on: cbsnews.com


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