Stocks sink; S&P 500 sell-off erases 2011 gains

There was finally a debt vote, and the U.S. Senate passed legislation to raise the debt ceiling today, but it didn’t stop the U.S. stock market from sliding farther down, as yet another economic report revealed how weak the economy is. Tuesday’s declines wiped out the 2011 gain for the Standard & Poor’s 500 Index, CNNMoney reports.

The S&P 500 lost 33 points, or 2.6 percent, to close at 1,254. The Russell 2000 Index of small companies dropped 3.3 percent, also erasing its 2011 gain. The Nasdaq Composite declined 75 points, or 2.8 percent, to 2,669. The Dow Jones industrial average fell 265.87 points, or 2.2 percent, to 11,866.62, it’s lowest level since March 18, Bloomberg reports. The Dow has now declined for eight days in a row, which is the longest slump since October 2008.

All 30 stocks in the Dow lost ground, NPR reports. General Electric Co., Pfizer Inc., Home Depot and United Technologies Corp. posted losses of 4 percent or more.

The report that sent stocks tumbling today came from the U.S. Commerce Department. Its figures showed that Americans cut spending in June for the first time in almost two years. Analysts had predicted a slight increase in spending. In addition, incomes grew at the slowest pace since November and the savings rate increased.

On Monday, a report showing low levels of manufacturing activity prompted investors to sell off stocks.

(More from GlobalPost: News of debt deal not enough to lift U.S. markets)

“Now that we’ve moved past the debt ceiling fears, people are really focused on growth,” Mark Bronzo, a portfolio manager at Security Global Investors in Irvington, New York, told Bloomberg news. “We’re in this period where people don’t love the stock market. They think economic growth is slow. So, there’s a flight to safety.”

"The market is starting to wonder where the growth is going to come from," said Nick Kalivas, a vice president of financial research at MF Global, told NPR. "It hasn't hit the panic button yet, but that's where we're drifting."

Global markets were gloomy, too. Britain's FTSE 100 fell 1 percent, the DAX in Germany dropped 2.3 percent, and France's CAC 40 slipped 1.8 percent. The Shanghai Composite dropped 0.9 percent, the Hang Seng in Hong Kong tumbled 1 percent and Japan's Nikkei lost 1.2 percent.