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NEW YORK: US stocks stumbled on Tuesday on nervousness at the start of the first-quarter earnings season and persistent concerns about the health of financial institutions reeling from turmoil.
The Dow Jones Industrial Average fell 186.29 points (2.34 percent) to 7,789.56, moving further from the 8,000 level the blue-chip index breached last Friday capping a four-week rally.
The tech-heavy Nasdaq composite dropped 45.10 points (2.81 percent) to 1,561.61 and the broad-market Standard & Poor's 500 index was down 19.93 points (2.39 percent) to 815.55.
Traders said that the market, posting its second consecutive day of losses, was nervous ahead of the January-March earnings reporting season.
It kicked off on Tuesday after the market closed with aluminium giant Alcoa, a Dow component, reporting a hefty 497-million-dollar net loss.
It was its second consecutive quarterly loss as aluminium prices plunged amid a sharp global economic downturn.
Alcoa had closed 1.52 percent lower at 7.79 dollars.
"The market is more vulnerable to the expected poor first-quarter earnings' and disappointing management' outlooks given the recent sharp advance in stocks," said Wachovia Securities chief market strategist Al Goldman.
"With what is expected to be another downbeat earnings season on the horizon, participants moved to take profits for the second straight session," analysts at Briefing.com said in a note to clients.
"The decision to hedge against further disappointment has led participants to send stocks 3.2 percent lower during the course of the past two sessions," they said.
The market was also gripped with financial sector concerns, following a newspaper report highlighting the depth of the bad asset problem plaguing institutions.
According to the Times of London, new forecasts from the International Monetary Fund (IMF) are set to suggest that toxic debts racked up by banks and insurers could spiral to four trillion dollars,
The IMF said in January that it expected the deterioration in US-originated assets to reach 2.2 trillion dollars by the end of 2010, but it is understood to be looking at raising that to 3.1 trillion dollars in its next assessment of the global economy, due to be published later this month, the report said.
In addition, the IMF was likely to forecast 900 billion dollars for toxic assets originated in Europe and Asia, the Times said.
Among financial stocks, Bank of America fell 1.60 percent to 7.36 dollars, JPMorgan Chase by 3.37 percent to 27.25 dollars and Wells Fargo by 2.62 percent to 14.85 dollars. But Citigroup was up 1.47 percent to 2.76 dollars.
Boeing closed 3.98 percent lower at 36.64 dollars as planned military budget cutbacks could put its combat jet and missile defence programmes at risk.
The bond market rose. The yield on the 10-year US Treasury bond fell to 2.909 percent from 2.939 percent on Monday and that on the 30-year bond to 3.729 percent from 3.758 percent. Bond yields and prices move in opposite directions. - AFP/de
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