NEW YORK – U.S. stocks declined Tuesday, with the Standard & Poor’s 500 index slumping to an eight-week low, as the International Monetary Fund cut its growth forecast and warned of “frothy” equities amid signs of slowing growth in Europe.
The Russell 2000 index of small companies retreated 1.7 percent, the most since July 31, to bring its loss since a March record to 11 percent. The Dow Jones transportation index plunged 2.5 percent Tuesday, capping a 3.6 percent drop in the last two days, the most since January. Auto stocks in the S&P 500 sank 3.4 percent to lead losses among all 24 industries.
The S&P 500 sank 1.5 percent to 1,935.09, the lowest level since Aug. 12. Tuesday’s slide was the biggest in almost three weeks. Selling accelerated in afternoon trading as index futures contracts expiring in December slipped below 1,940, a level where two previous declines had ended earlier Tuesday.
“It’s definitely a risk-off day with ugly European data and growth concerns and I think we’re seeing some of that negative sentiment just getting ahead of itself here,” Mark Kepner, an equity trader at Chatham, New Jersey-based Themis Trading, said by phone.
The Dow Jones industrial average lost 272.52 points, or 1.6 percent, to 16,719.39, the biggest retreat since July 31, as all but one of the 30 stocks in the gauge dropped. The Chicago Board Options Exchange volatility index jumped 13 percent to 17.43 Tuesday, the highest since March 14.
Treasuries rose, with yields on 30-year notes falling to the lowest level since May 2013, and gold advanced a second day as the lower IMF forecast and subdued inflation fueled demand for safety assets.
