NEW YORK — The stock market extended its longest and deepest slump of the year Tuesday, caught between a recurring nightmare of European debt and the beginning of uncertain corporate earnings reports at home.
The Dow Jones industrial average fell 213.66 points, its biggest decline of the year and third triple-digit loss in four days. It closed at 12,715.93, its lowest since Feb. 2.
A five-day losing streak has shaved about 550 points off the Dow, more than half what it gained from January through March.
In Europe, concern about the financial health of Spain intensified, and borrowing costs for both Spain and Italy rose considerably. Spain's borrowing costs crept closer to levels that forced other countries to seek bailouts.
European markets sold off while Wall Street slept. The main stock indexes in Spain and France closed down about 3 percent, the equivalent of a 400-point drop in the Dow.
No apparent solution
“They've managed to put a Band-Aid on the debt crisis, but there's really no solution,” said Colleen Supran, a principal at the investment adviser Bingham, Osborn & Scarborough in San Francisco. “And Spain is a much bigger problem than Greece.”
The yield on 10-year Spanish bonds rose to almost 6 percent. The point at which governments can no longer afford to raise money on the international bond markets and must seek bailouts is generally considered to be 7 percent.
The 7 percent level forced Greece, the last focal point of the European debt crisis, to seek rescue loans. But Spain's economy is more than five times as large as Greece's.
Jeffrey Cleveland, senior economist at Payden & Rygel in Los Angeles, compared the financial markets to a person coming off a sugar high — in this case, the bailout package for Greece put together late last year.
The Dow's 8 percent gain through the first quarter has been shaved to 4 percent. The S&P's gain of 12 percent has been cut to 8 percent. And the Nasdaq's run of almost 20 percent is now just 15.
Last year, the Dow's longest losing streak was an eight-day, 858-point plunge in July and August, with Congress bickering over the government debt limit and just before the S&P ratings agency downgraded the U.S.