Dow Closes Below 10,000, Nasdaq -3.9% on Global Fears

By Melinda Peer

NEW YORK (TheStreet) -- Stocks plunged Tuesday after a sharp downward revision to China's leading economic indicators and a dismal U.S. consumer confidence reading heightened concerns about the economic recovery. Also weighing on investors' minds were the €442 billion in European bank debt obligations coming due this week.

The Dow Jones Industrial Average lost 268 points, or 2.7%, to finish at its second lowest close of the year at 9,870. The S&P 500 fell 33 points, or 3.1%, to 1041. The mark is the index's most depressed close of 2010, though the index managed to finish just above the technically key 1040 level. The Nasdaq tumbled 85 points, or 3.9%, to 2135.

The Conference Board said China's leading economic indicators increased 0.3% in April, compared with a previously reported 1.7% jump. April's mild rise follows 1.2% growth in March and a 0.4% uptick in February.

Also weighing on the Chinese market, Agricultural Bank of China's initial public offering saw a lower-than-expected pricing range, according to The Wall Street Journal.

European markets fell as investors eyed the €442 billion ($545.5 billion) coming due for banks to the European Central Bank on Thursday. In addition to concerns about whether banks will be able to meet their repayments, investors also worried that debt obligations would leave banks with liquidity shortfalls.

"We had a dark cloud hovering over the market for the last couple of weeks or so and the mood of the market has been decidedly negative," said Jay Suskind, senior vice president at Duncan Williams. "News of slower growth in China followed by that low consumer confidence reading just really pressured the market."

"The market is certainly risk-averse right now with the bond market leading the stock market. The volume isn't large but the buyers are on strike because there's just too much uncertainty out there. We have employment data coming out this week but I've seen such a huge range in estimates that there's certainly a lot of uncertainty there and now we have uncertainty surrounding financial regulation legislation. I keep looking for good news and all I can see is that there isn't a lot of volume so at least this just appears to be a buyers' strike more than anything else."

Suskind said it may take the upcoming earnings season to convince markets that we're not headed for a double-dip.

"It's possible that positive employment data could provide markets with the catalyst they need to move higher but with the long holiday weekend coming, who's going to be around to see it?"

Overseas on Tuesday, Hong Kong's Hang Seng fell 2.3% while Japan's Nikkei slipped 1.3%. The FTSE in London dropped 3.1%, and the DAX in Frankfurt lost 3.3%.