Index Slide Accelerates, Dow Drops 161 Points

The Lowdown

Stocks teetered, then fell sharply Tuesday afternoon driven first by declining oil prices and then spurred on by reports that fresh government spending may be needed to stabilize the economy. 

Green shoots, signs of ecnomic recovery, appeared to wilt before investors' eyes, as commodities sold off, taking major stock indexes down as well.

The Dow Jones Industrial Average slid 161 points to close at 8164, a level not seen since late April.  The Nasdaq dipped 41 points to end at 1746 and the S&P 500 was down 18 to 881. Crude futures slid below $63 a barrel in late afternoon trading. 

The Mortgage Bankers Association reproted Tuesday that credit card delinquencies rose to a record 3.23% in the first quarter, another sign that economic revival has not yet arrived.

Ahead of the Wednesday start of earnings season, both Intel (INTC) and Marvell Technology Group (MRVL) saw mild boosts following upgrades from Merrill Lynch, which boosted its view on the semiconductor sector as it anticipates new demand after depleting inventories.

Oil prices again declined on fears of reduced demand, although traders reacted to news that U.S. regulators may curb speculation on oil and gas by limiting the holdings of energy futures traders. The Energy Select Sector SPDR fund (XLE) dipped after crude prices declined. Crude slipped $1.12 to close at $62.93 on the Nymex. The Group of Eight opens a summit Wednesday in Italy, and world leaders are expected to discuss high levels of government, now at its highest level since World War II.

The yen and the dollar rose against the euro on investor concerns that the economic recovery is on shaky ground. Government bonds fell in advance of planned debt sales by numerous countries, including the U.S.