Stocks plunged Tuesday, despite some encouraging U.S. economic reports, as investors sold shares at the beginning of a historically weak month on Wall Street on the belief that stocks have risen to high and too quickly. Stocks have risen steadily since March, as investors welcomed extraordinary U.S. fiscal and monetary stimulus to limit the recession's effects, as well as signs that corporate profits have stabilized. But with the Standard & Poor's 500 index up 52 percent from March 9 lows, market participants are now looking for concrete evidence that the economy is recovering. The morning's reports were mostly positive, but not as positive as the most optimistic forecasts. The Institute for Supply Management reported that its manufacturing index for August showed growth in the sector for the first time in 19 months. Pending home sales rose for the sixth consecutive month, jumping 3.2 percent in July to the highest level in almost two years, the National Association of Realtors reported. However, U.S. construction spending fell 0.2 percent in July as weaker non-residential and government spending offset strong spending on homes and apartments, the Commerce Department reported. Light sweet crude oil for October delivery fell $1.91 to $68.05 a barrel on the New York Mercantile Exchange. Oil prices have been dropping since hitting a 10-month high just below $75 a barrel in late August. The U.S. dollar gained versus the euro and the yen. The Dow Jones industrial average fell 185.68, or 2 percent, to 9,310.80. Many of the summer's big bank winners led Tuesday's declines. Bank of America fell 5 percent in active trading after being the biggest Dow gainer in the June-to-August period, rising 56 percent. American Express lost 4 percent after gaining 36 percent over the past three months and being the second-best Dow performer. Citigroup lost 6 percent after rising 34 percent over the past three months, and J.P. Morgan Chase lost 3 percent after rising 17 percent this summer. The broader S&P 500 fell 22.58, or 2.2 percent, to 998.04. The technology-heavy Nasdaq composite index fell 40.17, or 2 percent, to 1,968.89. The New York Stock Exchange composite index fell 155.43 to 6,487.81. The American Stock Exchange composite index fell 7.70 to 1,662.95. And the Russell 2000 index fell 14.01 to 558.06.
