Dow dives 178 on China's inflation fears

Updated: 11:44 p.m. ET

Stocks suffered their worst one-day losses since August as concern built that China was about to impose some price controls to rein in inflation and that European debt problems are getting worse.

The China worries battered commodity prices; gold fell more than $30 an ounce. Wheat dropped nearly 7%. The rout slashed the prices of commodity stocks.

The selling was deep enough that the Dow Jones industrials ($INDU) fell below 11,000 several times during the day before recovering a bit at the close.

• Find a top-performing ETF

The Standard & Poor's 500 Index ($INDU) dropped below an important support level.

The Dow closed down 178 points, or 1.6%, to 11,024. The blue chips had been down as many as 223 points. The S&P 500 was off 19 points, or 1.6%, to 1,178. The Nasdaq Composite Index ($COMPX) fell 44 points, or 1.8%, to 2,470.

If you wanted some good news from today's drubbing, it came from General Motors. News reports suggested that the automaker is increasing the site of its initial public offering by 31%, to about 478 million shares.

The shares are expected to price between $32 and $33 a share. Combined with a sale of $4 billion in preferred stock, the GM offering would the largest U.S. IPO. 

Futures trading, however, suggests a modestly lower open on Wednesday.

Back to mid-October levels
The GM news came after a  close that saw the indexes ending the day back at levels last seen in mid-October.

The Dow's loss was its worst one-day point and percentage loss since Aug. 11, when the blue-chip index fell 265 points.

The S&P 500's decline pushed it below 1,193. That has been an important support level. From that level, the index surged to a high of 1,227 on Nov. 5.

The index held above 1,177, however. That level provided important support for the index through much of October.

A support level is a price point that tends to bring new buying in a stock or index.

Only two of the 30 Dow stocks were higher today: Home Depot (HD), up 1% to $31.71, and Wal-Mart Stores (WMT), up 0.6% to $54.26. They were also the sixth- and seventh-best S&P 500 performers.

Both reported fiscal-third-quarter​ results that beat estimates and guided higher for the fourth quarter.

• Retailers set sights on holidays

Wal-Mart sees same-store sales rising as much as 2% for the quarter, with most of the sales coming in the week before Christmas.

Selling was broad; each of the 10 sectors of the S&P 500 fell at least 1%.

The Nasdaq-100 Index ($NDX.X), which tracks the largest Nasdaq stocks, was off 38 points, or 1.8%, to 2,094. First Solar (FSLR) was the biggest percentage loser in the index, down 6.4% to $130.69. Apple, down 1.8% to $301.59, subtracted 7.6 points from the index. 

Only three Nasdaq-100 stocks were higher: Urban Outfitters (URBN), up 11.9% to $36.63; Mattel (MAT), up 3.3% to $24.33; and Costco Wholesale (COST), up 0.4% to $65.74.

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil			$82.34			$84.86			1.12%			3.76%
(per barrel)
Heating oil			$2.3090			$2.3709			3.19%			9.14%
(per gallon)
Natural gas			$3.8420			$3.8450			-5.45%			-31.48%
(per mil. BTU)
Unleaded gasoline			$2.1557			$2.1950			4.68%			5.01%
(per gallon)
Retail gasoline			$2.8930			$2.8920			2.99%			9.62%
(per gallon; AAA)

China's inflation fears hit markets
Today's selling came after China's Shanghai Composite Index fell more than 4% on word that the government was considering measures to counter rapid price increases across much of the economy, especially for food.

Premier Wen Jiabao took to a Shanghai supermarket to say that his Cabinet is drafting anti-inflation measures.

The China news slammed commodity prices globally. Wheat and corn prices were sharply lower. Wheat fell 6.3% to $630.50 a bushel in Chicago.  Corn was off 5.2% to $5.265.

At the same time, the European debt crisis was grinding along. Reports said Irish and European officials were discussing a bailout package for Ireland's debt. The worries pushed the dollar higher against the euro.

The Wall Street Journal said European finance ministers working on an international aid package for Ireland want the United Kingdom to make bilateral loans to Ireland as part of a larger aid package that could total up to 100 billion euros ($135 billion).

Greece was brought back into the center of sovereign debt concerns by news that Austria has opted to withhold bailout funds for the country because Greece may miss its deficit reduction target.

Gold settled at $1,338.40 an ounce, down $30.10, or 2.2%. The metal is down 6% since peaking at $1,424.30 intraday on Nov. 9.

Silver was off 85.9 cents, or 3.3%, to $25.333 an ounce, and copper was down 19.75 cents a pound, or 5%, to $3.7275.

Crude oil, meanwhile, settled down $2.52, or 3%, to $82.34 a barrel.

Meanwhile, interest rates moved lower as the dollar rallied against major currencies. The 10-year Treasury yield dropped to 2.847%, down from 2.91% on Monday. The five-year Treasury was at 1.467%, up from 1.493% on Monday.

Commodity stocks were slammed. Freeport-McMoRan Copper & Gold (FCX) was off 4.3% to $97.61. Southern Copper (SCCO) dropped 2.9% to $42.43. U.S. Steel (X) dropped 2.4% to $45.43. Dow component DuPont (DD) dropped 1.4% to $45.68.

Caterpillar (CAT), which has benefited from China's enormous investment in infrastructure, was off 1.8% to $80.37. That subtracted 12 points from the Dow.

Stocks seeing big activity

• Dendreon (DNDN), up 1.2% to $35.87. Soros Fund Management disclosed it owns about 1.8 million shares of the company. At the same time, there are concerns that Medicare won't cover the full $93,000 cost of its prostate-cancer drug Provenge.
• Dick’s Sporting Goods (DKS), up 12% to $33.51. The sporting goods chain earned 22 cents a share in the fiscal third quarter. Analysts had expected 17 cents. The company raised its full-year earnings forecast to at least $1.56 a share.
• General Growth Properties (GGP), down 7.1% to $14.31. The big shopping mall owner said an offering of 135 million shares was priced at $14.75 a share, less than expected. Proceeds will be used to buy back equity commitments from investors in a reorganization plan.
• Mela Sciences (MELA), down 54.2% to $2.92. A U.S. Food and Drug Administration staff report said the company’s MelaFind hasn’t been adequately studied as a skin-cancer diagnostic tool and could put the public health at risk.
• Nordstrom (JWN), down 3.1% to $40.55. The upscale department-store chain narrowed its 2011 outlook to a range of $2.60 to $2.65 a share. The consensus had been $2.64.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.140%			0.130%			16.67%			180.00%
5-year Treasury note			1.467%			1.493%			24.43%			-45.38%
10-year Treasury note			2.847%			2.648%			9.00%			-25.92%
30-year Treasury bond			3.916%			4.370%			-2.10%			-15.62%
Currencies
U.S. Dollar Index			79.333			78.673			2.42%			1.42%
British pound			$1.5891			$1.6059			-1.02%			-1.76%
(in U.S. $)
U.S. $ in pounds			£0.6293			£0.6227			1.03%			1.80%
Euro in dollars			$1.3493			$1.3591			-3.36%			-5.86%
(in U.S. $)
U.S. $ in euros			€ 0.7411			€ 0.7358			3.48%			6.22%
U.S. $ in yen			83.47			83.11			3.17%			-10.24%
U.S. $ in Chinese			6.66			6.64			-0.45%			-2.37%
yuan
Canada dollar			$0.980			$0.991			-0.26%			3.07%
(in U.S. $)
U.S. dollar			$1.021			$1.009			0.27%			-2.98%
(in Canadian $)
Commodities
Gold			$1,338.40			$1,368.50			-1.41%			22.09%
(per troy ounce)
Copper			$3.7275			$3.9250			-0.16%			11.39%
(per pound)
Silver			$25.2330			$26.0920			2.72%			49.80%
(per troy ounce)
Wheat			$6.2650			$6.7275			-12.65%			15.70%
(per bushel)
Corn			$5.2650			$5.5550			-9.54%			27.02%
(per bushel)
Crude oil			$82.34			$84.86			1.12%			3.76%
(per barrel)