Stocks Fall for Fifth Straight Session

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NEW YORK (TheStreet) -- Stocks sustained deep losses Tuesday with eurozone worries once again front and center amid growing trepidation about Spain's economic stability.

All three major U.S. equity indices lost ground for a fifth straight trading session. Sentiment took an abrupt turn for the worse after European stock markets finished with sharp drops. Traditional safe havens drew buyers with bonds and gold on the rise.

The Dow Jones Industrial Average dropped 214 points, or 1.7%, to close at 12,716. The S&P 500 fell 24 points, or 1.7% to close at 1359. The Nasdaq plunged 56 points, or 1.8%, at 2991, surrendering the 3000 level for the first time since March 13.

The 10-year Treasury bond rose 18/32, pushing the yield down to 1.98%, its first trip below 2% since March 12.

Breadth within the Dow was extremely negative with only one of of the index's 30 components -- Hewlett Packard --finishing higher.

Alcoa was among the biggest blue-chip laggards, down 2.9%. The aluminum company reported a surprise first-quarter profit after the bell, and its stock caught a bounce in after-hours trading.

Profits came in at 10 cents per share on revenues of $6 billion on improved productivity and market conditions. Alcoa was expected to post a loss of 4 cents a share on revenue of $5.77 billion. Shares were rebounding 4% in the extended session.

Bank of America saw the largest drop among the blue chips on Tuesday, falling more than 4%.

Caterpillar , Walt Disney , Boeing , General Electric , Home Depot and Microsoft all shed more than 2%.

On the New York Stock Exchange, decliners outnumbered advancers by more than 6-to-1 ratio, while the Nasdaq exchange had five losers for every gainer. The VIX, known as Wall Street's fear gauge, was up more than 8% at 20.39, breaking above the 20 level, which is seen as indicative of rising fear, for the first time since March 7. The index measures the implied volatility of options activity in the S&P 500.

The weakness extended losses on Monday in the wake of Friday's disappointing jobs report. The Dow posted its first finish below 13,000 since March 12 after the government announced that nonfarm payrolls increased 120,000 in March, far short of the consensus view for a 200,000 gain.

The driver for Tuesday's nervousness about Europe was a spike in the yield on Spanish ten-year bonds in the secondary market to 5.93% from 5.74% as Central Bank Governor Miguel Angel Fernandez Ordonez warned that the nation's banks may require more capital if the economy continues its downward slide. The economy is expected shrink 1.7% or worse as the government enforces its severe austerity measures.

European stocks endured a brutal sell-off into the close, with the London's FTSE declining 2.2% while Germany's DAX fell 2.5%.

Economic news in the U.S. was not pleasant either. The National Federation of Independent Business said its business optimism index declined to a reading of 92.5 in March from February's 94.3, the first drop in six months. As owners grew more doubtful about sales and profits, hiring plans were also put on hold.

Elsewhere on the economic front, the Commerce Department said wholesale inventories rose 0.9% in February, slightly above expectations for a 0.5% increase, according to a survey conducted by Thomson Reuters.

Corporate quarterly reports will be the main source of tension in the markets throughout the week. Expectations are fairly low for the first quarter. According to Thomson Reuters, the blended estimate is for year-over-year growth of 3.1% from the S&P 500, down from 9.2% in the fourth quarter. The debate now is whether that low bar might provide a positive catalyst to counter any blips in the economic data.

"Any time you have low expectations in the midst of a strong rally that leaves potential upside if companies can even slightly beat expectations," says Joe Bell, senior equity analyst at Schaeffer's Investment Research. "With low expectations, we think earnings will either come in line or beat, and that could mean another strong quarter."


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In corporate news, shares of Supervalu soared almost 15% at $6.12 on volume of more than 35 million as the supermarket operator reported better-than-expected fourth-quarter adjusted earnings of 38 cents a share and forecast a full-year profit of between $1.27 and $1.42 a share.

Apple shares hit new all-time highs and broke the $600 billion market capitalization mark earlier in the session but the stock ended the day lower by 1.2% at $628.44.

Best Buy shares fell 5.8% at $21.33 after the Minneapolis-based consumer electronics retailer said CEO Brian Dunn has resigned.

Sony , the Japanese electronics giant, said Tuesday it projects an annual loss of 520 billion yen ($6.4 billion), much wider that earlier predictions of a loss of 220 billion yen. The stock lost more than 9.3% in U.S. trades.

Yahoo! CEO Scott Thompson unveiled details of the new organization structure. The company will have three groups- consumer, regions and technology, with a renewed focus on commerce. The stock finished lower by 0.7% at $14.99.

The Internet company said last week it would be slashing 2,000 jobs.

Shares of Vivus dropped nearly 6% to close at $21.56 after the company said the review date of its new drug application for proposed obesity treatment Qnexa has been extended by three months.

In other news, presidential candidate Rick Santorum announced Tuesday afternoon that he is suspending his bid for the presidential nomination of the Republican party.

Earlier In Asia, Japan's Nikkei index slid 0.09% and Hong Kong's Hang Seng index fell 1.2%. This, amid the Bank of Japan's collective vote down of more monetary stimulus and China's surprise trade surplus as imports weakened to year-over-year growth of 5.3% in March compared with February's much better 39.6%, inspiring more concerns about a China slowdown.

May oil futures slipped $1.44 to $101.02 a barrel, while June gold futures erased earlier losses to rise $16.8 to settle at $1,660.7 an ounce.

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The dollar index was up 0.13%.

-- Written by Andrea Tse and Shanthi Bharatwaj in New York.

>To contact the writer of this article, click here: Andrea Tse.

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