Stocks were battered by mounting fears over Greece’s financial stability Tuesday, pushing the Dow Jones Industrial Average down 1.9%. Indexes fell despite a report that showed a rise in U.S. home price for the first time in more than three years, as investors edged away from risk ahead of a Federal Reserve meeting.
The Dow lost 214 points, falling to 10991, its first close below 11,000 since April 9. The S&P 500 slipped 28 points to 1184, and the Nasdaq ebbed 51 to 2471.
Financials took the heaviest beating, but most sectors were affected by the selloff. Energy, materials, capital goods and health care stocks suffered widespread losses.
Standard & Poor’s Ratings Services downgraded Greece to junk status and said it had weak prospects for economic growth. Officials from the European Union, the International Monetary Fund and the euro zone continued to thrash out the fine points of a €45 billion ($60 billion) financial rescue package for debt-strapped Greece.
Meanwhile, investors moved toward the safety of the dollar. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six other currencies, was up 0.3% recently. Treasurys also rose, pushing the 10-year yield down to 3.68%. Crude-oil futures slipped $2.27 to $81.93 a barrel. Gold futures rose.
The action came despite the S&P Case-Shiller home-price indexes showing U.S. home prices in February rose from a year earlier for the first time in more than three years, as month-to-month declines continued for the fifth straight month and worries about financial regulation and the Fed’s latest interest-rate meeting took center stage.
In addition, S&P’s David Blitzer warned it is “too early to say that the housing market is recovering.” He noted home prices in six metropolitan areas were at their lowest levels in February since they peaked several years ago.
In Washington, Goldman Sachs (GS) Chief Executive Lloyd Blankfein and other top Goldman executives were grilled by the Senate Permanent Subcommittee on Investigations, which is examining the role of investment banks in the financial crisis. The committee released a raft of emails Monday designed to show, contrary to the firm’s contention, that Goldman had a clear strategy of betting against the collapsing mortgage market.
The testimony came a day after Republicans closed ranks to block Democrats’ overhaul of financial regulation, a standoff that throws the sweeping legislation into a period of uncertainty. On a 57-41 vote, Democrats fell short of the 60 votes they needed to begin debate, even losing one of their own. The vote dramatized how politicized the debate has become on an issue once thought to be a ripe for cross-party cooperation.
Dow Jones Newswires contributed to this report.
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