Wall Street stocks slide, dollar hits eight-month high

Tue Oct 11, 2016 4:41pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Slumping crude prices and a dour start to Wall Street's corporate earnings season pulled down U.S. and European equities on Tuesday, while the dollar hit an eight-month high on increasing bets U.S. interest rates will rise in December.

Wall Street fell more than 1 percent as shares of aluminum producer Alcoa (AA.N: Quote) and diagnostics test maker Illumina (ILMN.O: Quote) plunged, with worries over the make-up of the U.S. Congress after November's election also weighing on stocks.

Alcoa shares tumbled 11.4 percent and Illumina plummeted 24.8 percent, casting a pall over the market. Wall Street's "fear gauge," the CBOE Market Volatility index , jumped almost 24 percent at one point and ended the day up 15 percent.

Investors were also jittery about earnings to be reported on Friday by Wells Fargo (WFC.N: Quote) and Citigroup (C.N: Quote), according to brokerage Seaport Global.

The UK benchmark FTSE 100 equity index .FTSE reversed course after it set a record intraday high that was helped by further sterling weakness.

The British pound has lost more than 4 percent of its value against the dollar over the past week as investors fret about a "hard exit" by Britain from the European Union.

In the United States, investors were looking to Wednesday's release of minutes from the Fed's policy-setting meeting in September for signs of a December interest rate hike.

The futures market perceives a roughly 70 percent chance that the Fed will lift rates in December, a view that pushed the benchmark 10-year U.S. Treasury yield US10YT=RR to a more than four-month high.   Continued...

Traders work on the floor of the New York Stock Exchange (NYSE) as the market closes in New York, U.S., October 3, 2016.  REUTERS/Lucas Jackson