S&P 500 falls below 2,000; oil extends decline, bonds rally
NEW YORK (AP) — U.S. stocks fell on Tuesday, bonds rallied and the price of oil continued to fall.
Investors had some downbeat news on the economy to digest, as reports showed that growth in the service industry slowed last month and that factory orders fell in November.
KEEPING SCORE: The Standard & Poor's 500 index was down 22 points, or 1.1 percent, to 1,998, as of 2:13 p.m. Eastern. The Dow Jones industrial average fell 184 points, or 1.1 percent, to 17,315. The Nasdaq composite dropped 68 points, or 1.5 percent, to 4,584.
OIL SLIDE: U.S. crude continued to fall, dropping $2.34 to $47.67 a barrel on the New York Mercantile Exchange. The price of oil has fallen by more than half since trading as high as $107 in June. Brent crude, the global benchmark, was down $2.37 at $50.73 a barrel.
IMPACT: The prolonged slide in oil prices should help economic growth by reducing energy costs, however investors worry that the large scale of the downturn could foretell a global economic slowdown. Also, as the price of oil falls, energy companies might cut jobs, put off investment or go out of business.
U.S. Steel said Tuesday it will lay temporarily lay off about 750 employees from two plants that make tubular steel, which is used in oil and gas drilling. The Pittsburgh company said it is making the moves in response to falling oil prices and competition from foreign companies.
THE QUOTE: "The overall situation in the economy is still relatively positive," said Randy Schwab, Managing Director of Trading and Derivatives with the Schwab Center for Financial Research. "But I do have a bit of a cautious perspective in the next couple of weeks, just simply because oil does not seem to be finding a floor."
KORS FOR CONCERN: Michael Kors slumped $7.50, or 10.3 percent, to $65.40. Analysts at Credit Suisse cut their price target on the company's stock to $79 from $103 following what they described as a "dramatic" increase in promotional activity at the luxury retailer, suggesting that it is struggling to maintain its growth rates.
YOU'VE GOT VIDEO: AOL bucked the trend of falling prices, climbing $1.97, or 4.4 percent, to $46.71 after Bloomberg reported that Verizon had approached the company about a potential acquisition or joint venture to expand its mobile-video offerings. Verizon gained 43 cents, or 0.9 percent, to $46.99.
FEWER ORDERS: A report that orders to U.S. factories fell for a fourth straight month in November stoked investors' concerns about growth. The Commerce Department said Tuesday factory orders dropped 0.7 percent in November after a similar 0.7 percent fall in October. The November weakness came from decreases in demand for primary metals, industrial machinery and military aircraft.
The Institute for Supply Management said Tuesday that its services index fell to 56.2 last month, down from 59.3 in November
EUROPE'S DAY: Germany's DAX was flat and France's CAC-40 fell 0.7 percent. Britain's FTSE 100 lost 0.8 percent.
EURO JITTERS: The possibility that Greece's anti-austerity Syriza party might win national elections this month has fed doubts about whether the country will stick to terms of its bailout and remain in the euro bloc. Meanwhile, a new survey showed that economic growth in the eurozone was weak at the end of 2014. The news helped keep pressure on the euro, which traded at $1.1935, near a nine-year low.
BONDS AND CURRENCIES: In government bond trading, the yield on the 10-year Treasury note fell back below 2 percent. Apart from a brief dip in the fall, it's the first time the note's yield has fallen below that level in more than 18 months. The yield on the note, which drops when prices rise, sank to 1.92 percent on Tuesday from 2.03 percent late Monday.
The dollar declined to 118.75 yen from 119.44 yen.
METALS: Precious metals futures mostly rose. Gold increased $15.40 to $1,219.40 an ounce, silver rose 42 cents to $16.64 an ounce and copper was flat at $2.77 a pound.