In a repeat of Monday, stocks headed south at Tuesday's open as Wall Street's European sovereign debt headache continues to linger.
Today's Markets
As of 9:32 a.m. ET, the Dow Jones Industrial Average dropped 93.70 points, or 0.84%, to 10961.14, the Standard & Poor's 500 declined 10.68 points, 0.90%, to 1177.05 and the Nasdaq Composite slumped 25.89 points, or 1.02%, to 2499.84. The FOX 50 lost 7.68 points, or 0.90%, to 844.05.
In addition to growing signs that Portugal and Spain may be next in the sovereign debt crisis, Wall Street was hurt by a weaker-than-expected report on U.S. home prices and signs of trouble in Asia.
Some analysts were skeptical Wall Street will be able to repeat Monday's comeback, which wiped out nearly all of a 162-point plunge on the Dow.
“It feels like the market has to have a panic selloff today and just flush to the downside. I’m not sure there’s going to be enough news to hold it up here,” said Nick Kalivas, vice president of financial research at MF Global.
Wall Street remains focused on the global picture as the euro tumbled another 1.04% to $1.2984 -- a fresh two-month low. The currency has been slammed by fears that the $115 billion rescue of Ireland won't be enough to stop the crisis from spreading to bigger economies in Portugal or even Spain. Underscoring those concerns, the cost to insure the debts of Spain, Italy, Portugal, Ireland and even Belgium all hit record highs. Spain's Banco Santander (STD: 9.53 ,-0.18 ,-1.85%) also took another hit.
A weaker euro against the dollar also creates problems for Wall Street because a stronger greenback tends to weigh on commodities and hurt exports.
In the commodities complex, crude oil slid 95 cents a barrel, or 1.10%, to $84.78. Gold jumped $17.50 a troy ounce, or 1.28%, to $1,385.00.
Meanwhile, Wall Street continues to be sensitive to signs that China will need to tighten its monetary policy to prevent its economy from overheating. Reports out of Asia about a potential capital gains tax and a big interest rate hike concerned some traders. China's Shanghai Composite sold off 1.6% and Japan's Nikkei 225 lost nearly 2%.
Home builders like Pulte (PHM: 6.21 ,-0.03 ,-0.48%) were also under some pressure as S&P/Case-Shiller said its index of home prices in 20 U.S. cities rose just 0.6% in September. Economists had called for a bigger increase of 1.1%. Later in the morning Wall Street could be moved by a Chicago manufacturing report and November consumer sentiment index.
"Whether it is the EU banking crisis, flagging recovery at home, stubbornly high unemployment rates, or the general backdrop of excess liquidity and reckless spending, the headwinds are real," Peter Kenny, managing director at Knight Capital Group, wrote in a note. "Given the overall lack of investor interest at these levels, a continued downdraft in the markets is the likely result."
Corporate Movers
Google (GOOG: 566.14 ,-15.93 ,-2.74%) slumped 2.5% as the European Commission launched an antitrust probe into allegations the tech giant abused its dominant online search position. Also, Google is nearing a deal worth as much as $6 billion to acquire local online discounter Groupon, All Things Digital reported. It would mark Google's largest acquisition ever.
Barnes & Noble (BKS: 12.98 ,-1.90 ,-12.77%) posted as loss of 22 cents a share, widely missing estimates. Sales jumped to $1.91 billion, but trailed the Street's view of $1.98 billion. Same-store sales slumped 3.3% overall, but soared 59% online. Barnes & Noble sees a fiscal third-quarter profit of 90 cents to $1.20 and a fiscal 2011 loss of 75 cents to $1.15.
Merck (MRK: 34.51 ,-0.17 ,-0.49%) tapped Kenneth Frazier as its new CEO starting on January 1. Frazier will replace Richard Clark, who will stay on as chairman. The drug giant had signaled the move when it named Frazier its president.
