NEW YORK (AP) — 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 also slid in China after regulators there tightened rules for lending.
KEEPING SCORE: 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 late morning, the average was down 163 points, or 0.9 percent, to 17,687. The Standard & Poor's 500 index fell 18 points, or 0.9 percent, to 2,042. The Nasdaq composite lost 38 points, or 1 percent, to 4,702.
EUROPE: France's CAC-40 fell 2.3 percent and Germany's DAX lost 1.9 percent. Britain's FTSE 100 shed 1.7 percent.
GREECE PLUNGE: The Athens stock exchange plunged 12 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 that is leading in the polls, would win. The Syriza party wants a cut to what Greece owes in bailout money. Such a move could spook investors for years, derailing the country's path out of its financial crisis.
CHINESE MARKETS: Major Chinese oil and bank stocks fell, some by the daily limit of 10 percent allowed by regulators. It was a break from a buying frenzy that has pushed the Shanghai benchmark up 41 percent since June. Investors had been driven by hopes for an economic rebound combined with outright cheerleading by the state press. Stock prices fell Tuesday after China's clearing house for securities trades raised the minimum rating for corporate bonds it would accept in exchange for short-term credit, prompting concern about the availability of financing for trades.
THE QUOTE: 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.
ASIAN SCORECARD: The Shanghai Composite Index dived 5.4 percent, though it's still up 6.6 percent over the past week following a months-long rally. China's four major state-owned banks all dropped by at least 9 percent. Hong Kong's Hang Seng dropped 2.3 percent and Tokyo's Nikkei 225 fell 0.7 percent.
GRIM DATA: Investor sentiment was also hurt by weak economic data. On Monday, a report showed China's November export growth was weaker than forecast and imports contracted unexpectedly. That suggested economic growth might be cooling further after hitting a five-year low in the latest quarter. For Japan, revised figures for the July-September quarter showed its economy shrank 1.9 percent, more than previously estimated.
OUT OF STYLE: Teen apparel company Abercrombie & Fitch rose $1.66, or 6 percent, to $28 after the company's CEO Mike Jeffries is retiring effect 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.
ENERGY: U.S. benchmark crude rose 62 cents, or 1 percent, to $63.66 per barrel in New York. The contract plunged $2.79 on Monday to close at $63.05.
CURRENCIES and BONDS: The dollar declined 1.6 percent to 118.96 yen. The euro rose 0.9 percent to $1.2421. In government bond trading, the yield on the 10-year Treasury note fell to 2.22 percent from 2.26 percent late Monday as prices rose.
– by AP Reporter Ken Sweet
