NEW YORK (Reuters) - Socks fell to their lowest level in 10 weeks on Tuesday as talk of a second government stimulus plan heightened fears that the economy is not yet on the path to recovery and that the corporate earnings season starting this week will be weak.
A member of the Obama administration's economic advisory panel said the United States should plan to possibly provide a second round of stimulus funds to prop up the economy. The comments come as investors question earlier optimism for a quick recovery, which had driven stocks as much as 40 percent higher since early March.
"It's clear that over the last three plus weeks that investors are becoming concerned that the recovery in the economy will not come as soon as expected and will not be as strong as expected," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
"When there's talk about another stimulus plan that adds fuel to that fire, it intensifies the concerns about the timing and strength of the recovery."
Cyclical stocks in the materials, energy, and industrial sectors, which had ridden a recent upswing in raw material prices on recovery hopes, led the market down as commodity prices eased. Copper, a barometer of global economic strength, fell nearly 2 percent.
Caterpillar Inc (CAT.N) ,a maker of heavy machinery for construction and mining companies, shed 4.5 percent to $30.29.
The Dow Jones industrial average .DJI dropped 161.27 points, or 1.94 percent, to 8,163.60. The Standard & Poor's 500 Index .SPX fell 17.69 points, or 1.97 percent, to 881.03. The Nasdaq Composite Index .IXIC lost 41.23 points, or 2.31 percent, to 1,746.17. more...
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