Wall Street sinks, S&P below support level

Tue Apr 10, 2012 2:43pm EDT
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By Ryan Vlastelica

NEW YORK (Reuters) - Stocks fell in a broad and steep decline on Tuesday, with the S&P 500 dropping for a fifth day to break under a key support level.

The industrial and materials sectors represented the stocks suffering the biggest drops. More than four-fifths of the stocks traded on the New York Stock Exchange slid, while about 80 percent of Nasdaq-listed shares declined.

The three major U.S. stock indexes fell more than 1 percent in midday trading, with the S&P 500 sliding below its 50-day moving average of 1,372.30. That area is viewed as the support level that will make or break the current uptrend as Wall Street enters the first-quarter earnings season.

"Dropping below that level suggests a loss of momentum, and it looks pretty widespread," said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut, who added that the S&P 500 could fall down to about 1,350.

The CBOE Volatility Index surged 10.4 percent to 20.77, and was up for the eighth straight day, its longest streak of consecutive gains in nearly nine years. At its session high, the VIX touched 20.98 - up 11.5 percent for the day.

Dow component Alcoa Inc (AA.N: Quote), a bellwether for the industrial sector, will kick off the quarterly earnings season after the closing bell when it releases its results. Alcoa's stock fell 2.6 percent to $9.35.

"I like the fact that we're pulling back ahead of earnings. That gives more room to the upside for positive reactions," Stockton said.

Apple shares (AAPL.O: Quote) dropped quickly from hitting a new high of $644 per share to briefly top a $600 billion market capitalization. Its stock later fell 1.1 percent to $629.36.   Continued...

Traders work on the floor of the New York Stock Exchange, April 9, 2012. REUTERS/Brendan McDermid