November 16th, 2010
06:08 PM ET

In worst day in months, stocks nosedive

A look at highlights from the day's business news:

Stocks plunge

U.S. stocks tumbled Tuesday, with all three major indexes down nearly 2%, as investors cast a worried eye at economic developments in Europe and China.

The Dow Jones industrial average finished 178 points lower, or 1.6%, with Alcoa and Travelers Companies leading the blue chip index's decline. Earlier in the session, the Dow fell more than 200 points.

The S&P 500 fell 19 points, or 1.6%. The tech-heavy Nasdaq lost 44 points, or 1.8%. The Dow and the S&P posted the biggest one-day losses since Aug. 11 and Aug. 19, respectively. The Nasdaq's drop was the largest since Oct. 19.

The day's sell-off also puts all three indexes on track to post a declinefor the month of November, erasing the gains logged after the Republican victory in the midterm elections and the Federal Reserve's announcement to pump $600 billion in to the economy.

Traders on Wall Street have been holding back on buying recently, as they await more clarity on the economic outlook for the United States, Europe and China.

Treasuries rebound

After a two-week selloff, Treasuries started to make a comeback Tuesday as investors take in the latest inflation data.

Early Tuesday, the government reported the Producer Price Index, a measure of prices at the wholesale level, rose 0.4% in October. That's the same level it increased in both August and September, and lower than economist's expectations for 0.8% growth.

Next up is the Consumer Price Index, which is due early Wednesday. The CPI - considered the broadest measure of inflation - is also expected to show dangerously low levels of inflation.

Bond traders closely watch inflation data, because expectations for how quickly prices rise over the long term could compete with the low yields on government bonds.

"Bonds are not like stocks," said Adrian Cronje, chief investment officer for Balentine. "If inflation does pick up and interest rates shoot up, you could find yourself taking a quite meaningful capital loss. So long-term holders of bonds that are not indexed to inflation are potentially quite vulnerable."

– CNNMoney.com reporters Hibah Yousuf and Annalyn Censky contributed to this report.

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Filed under: Business • Economy
soundoff (9 Responses)
  1. stocks

    Stocks nosedive. Yep.

    November 16, 2010 at 6:11 pm | Report abuse |
  2. Drunken Bum, lazy

    I had a bad day viet-nam vet signing in front of wal-mart today too. I hate it when someone asks me about 'nam. I act like i'm gonna go agent-orange and they back off. usually. other times a crowd gathers to see the spectacle. he-he

    November 16, 2010 at 7:02 pm | Report abuse |
  3. duke

    Have no fear the GOP is here!
    And once they put Social Security on the stock market,
    We are all through!!!

    November 16, 2010 at 7:16 pm | Report abuse |
  4. Daniel

    If being at war is so good for the economy as many of these right-wing nutjobs claim,then why is our economy in such bad shape? That's what you get for voting these warmongers into office!!!

    November 16, 2010 at 7:19 pm | Report abuse |
  5. duke

    Daniel!!
    The real question is,
    If trickle down economics worked so well,
    Then why is everybody suffering with the exception of the wealthy???
    The kicker is,it's the poor who keep voting for the wealthy!!!

    November 16, 2010 at 7:47 pm | Report abuse |
  6. SayGoodbye

    That's it I'm done.

    November 16, 2010 at 9:09 pm | Report abuse |
  7. Drew

    Contrary to popular belief, seeds for some of the biggest future stock market gains are rooted in an economic down turn...buy low...sell high. Im certainly not in the "bush tax cut" bracket, but I am definately adding to my portfolio now while the prices are reachable, rebounds always follow down turns. We def need more transparency, accountability and oversight/regulation tho.

    November 17, 2010 at 3:53 am | Report abuse |
  8. dan smith

    That's good ole Obamanocics at work for you.

    November 17, 2010 at 5:42 am | Report abuse |
  9. Michigan girl

    @Daniel smith president obama was handed a bag of sh!t by bushwhacker and has been trying like a financial magician to turn it into a bouquet of flowers. lets see when all the idiots who voted republican cant retire for extra years out of theyre lives and have to rely on a stock market that is totally unstable for thier income they will regret not sticking with the dems. it never ceases to amaze me how people cant see the gop agenda is to irradicate all help except for the rich. are they that stupid? wth were all the ones that put mr obama in office not much for following thru with a plan. i guess they get what they asked for! i feel sorry for us all now the republicans back to take away from joe six pack and give to joe champagne! sad very sad

    November 17, 2010 at 9:06 am | Report abuse |