Dow falls 101 on profit-taking, economic worries

Updated: 8:31 p.m. ET

Stocks suffered their worst declines in at least a month today despite reports showing a stronger-than-expect​ed index of home prices in 20 markets and the highest consumer confidence levels since February.

The slump was started by worries that the Federal Reserve's stimulus won't work and fears the market rally since June is running out of gas. At the same time, broadcasts of violent protests in Spain against potential new austerity measures also dismayed investors.

Charles Plosser, president of the Philadelphia Federal Reserve Bank, said he does not believe the Fed's latest stimulus campaign would do anything for economic growth. Plosser had opposed the Fed's decision to buy up to $40 billion in mortgage bonds. At the same time, BlackRock, one of the top asset managers, said stocks have peaked for the year. The Standard & Poor's 500 Index ($INX) will end the year at 1,450, BlackRock said -- just below current levels, but the firm sees the S&P reaching 1,25 by mid-2013.

Casualties of the pullback were housing stocks, which had rallied in the morning thanks to the home-price numbers. Construction equipment maker Caterpillar (CAT) weighed on the market after warning its 2015 profits would be lower than expected. 

The Dow Jones industrials ($INDU) fell 101 points to 13,458, their third straight decline and biggest one-day loss since Aug. 30. The S&P 500 was off 15 points to 1,442, and the Nasdaq Composite Index ($COMPX) was down 43 points to 3,118, its second loss in a row. The Nasdaq-100 Index ($NDX) lost 39 points to 2,805.

Article continues below.The S&P 500's close was its lowest since Sept. 12, and its loss was its biggest since June 25. The Nasdaq's loss, its third in four days, also was its largest since June 25.

The Dow had risen as many as 61 points to 13,620 before selling set in. The blue chips have now topped 13,600 five times since Sept. 14 -- and been unable to hold that level into the close. The last time the Dow finished above 13,600 was Dec. 10, 2007.

The S&P 500 hit a 2012 closing high of 1,465 on Sept. 14. The index index hit an intraday high of 1,475 -- and fell back. It hasn't come close to 1,475 since then. The index is up 14.6% this year and is up 12.8% since bottoming in early June after a big sell-off in May.

Wednesday will feature a Commerce Department report on new-home sales. Futures trading suggests a slightly higher open for stocks.

Energy prices -- New York close (Updated)
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$91.37			$91.93			-5.29%			-7.55%
(per barrel)
Heating oil (-HO)			$3.1069			$3.0961			-2.30%			6.61%
(per gallon)
Natural gas (-NG)			$2.9240			$2.8370			4.47%			-2.17%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.8224			$2.7877			-5.06%			6.21%
(per gallon)
Brent crude			$110.45			$109.81			-3.60%			2.86%
(per barrel)
Retail gasoline			$3.8100			$3.8080			-0.50%			16.30%
(per gallon; AAA)

A Fed official's skepticism and worries about a peaking market
The day's early gains were wiped out when the Philadelphia Fed's Plosser said he doubted the Fed's plan will work.

"We are unlikely to see much benefit to growth or to employment from further asset purchases," Plosser said in the text of a speech prepared for delivery today. "Conveying the idea that such action will have a substantive impact on labor markets and the speed of the recovery risks the Fed’s credibility."

Plosser also told Fox News that the Fed would have to raise rates well before 2015 because he expects the economy to be much stronger. The Fed recently said it expected rates to be exceptionally low until mid-2015.

Also weighing on the market was BlackRock's projections that 2012's gains were already achieved. Reuters reported that BlackRock's estimate of a 1,450 finish for the S&P was actually an increase from the firm's earlier forecast that the index would end at 1,350 this year hit 1,400 next year.

Earlier, the firm projected the S&P would finish the year at 1,350 and rise to 1,400 by mid-2013.

By one measure -- relative strength -- the Dow and the S&P 500 have been looking overbought since about Sept. 14. A 14-day relative strength index for each was well above 70 for much of that times. Readings above 70 are an overbought signal. Readings below 30 are oversold signals. At today's close, RSI values for the Dow, S&P 500 and Nasdaq were at 73.5, 67.7 and 59.2, respectively.

• Check the RSI for the S&P 500.

Caterpillar weighs on Dow; Google jumps
Caterpillar closed down $3.86 to $87.01 and was the biggest loser among the 30 Dow stocks and the 15th-worst performer among S&P 500 stocks. The company said late Monday that it sees tepid economic growth over the next few years. Rivals Joy Global (JOY), Terex (TEX) and Manitowoc (MTW) were also lower.

Apple, the biggest influence on the Nasdaq-100, was down $17.25 to $673.54, its biggest one-day loss since July 25, when it reported a rare earnings miss. The stock had set a record close of $702.10 on Wednesday before its iPhone 5 went on sale.

Google (GOOG), meanwhile, hit a new intraday high of $764.89 but fell back to $749.16, down 22 cents. Its market capitalization of $245 billion is now within about $10 billion of Microsoft's (MSFT), which was $256.8 billion. Microsoft, down 39 cents to $30.39, is the publisher of MSN Money.

Only five of the 30 Dow stocks were higher, led by Home Depot (HD), up 33 cents to $59.72. The stock moved up because of the S&P/Case-Shiller report. Next were Johnson & Johnson (JNJ) and UnitedHealth Group (UNH), which only joined the Dow this week.

Crude oil, gold lose early gains as dollar comes back
Crude oil (-CL) in New York and gold (-GC) were initially higher -- but then fell back as worries built about the global economy. Crude settled at $91.37, down 56 cents from Monday, after trading as high as $93.20.

Brent crude was up 47 cents to $110.28 a barrel but had been as high as $111.47.

Gold for December delivery hit $1,777.90 an ounce before pulling back to $1,766.90. That was still up $2.30.

The dollar had fallen in the morning against the euro and other currencies but has bounced up against the euro.

The 10-year Treasury yield was 1.682%, down from Monday's 1.718%.

Home prices may give the economy a boost
The market was initially cheered by the S&P/Case-Shiller Home Price Index, which showed prices in 20 markets increased 1.6% in July over June on an unadjusted basis.

A seasonally adjusted measure showed only a 0.2% gain. Either way, the gain was the sixth in a row. Many economists believe the price gains reflect lower inventories of foreclosed homes on markets and intensifying bidding by investors for foreclosed homes that can be rented out.

Meanwhile, The Conference Board said data showed confidence among American consumers rose in September to a seven-month high, which may help support the largest part of the economy.

Short hits from the markets -- New York close (Updated)
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.1200%			0.100%			33.33%			1100.00%
5-year Treasury note			0.649%			0.659%			8.89%			-21.81%
10-year Treasury note			1.682%			1.718%			7.68%			-10.10%
30-year Treasury bond			3.032%			3.032%			12.97%			4.95%
Currencies
U.S. Dollar Index			79.608			79.577			-1.98%			-1.14%
British pound			1.6192			1.6228			1.91%			4.21%
(in U.S. $)
U.S. $ in pounds			£0.618			£0.616			-1.87%			-4.04%
Euro in dollars			$1.29			$1.29			2.47%			-0.39%
(in U.S. $)
U.S. $ in euros			€ 0.775			€ 0.773			-2.41%			0.39%
U.S. $ in yen			77.94			77.85			-0.70%			1.09%
U.S. $ in Chinese			6.33			6.31			-0.58%			0.02%
yuan
Canada dollar			$1.020			$1.022			0.57%			3.97%
(in U.S. $)
U.S. dollar			$0.981			$0.978			-0.57%			-3.83%
(in Canadian $)
Commodities
Gold (-GC)			$1,766.40			$1,764.60			4.67%			12.74%
(per troy ounce)
Copper (-HG)			$3.759			$3.732			8.72%			9.39%
(per pound)
Silver (-SI)			$33.9480			$33.9840			7.97%			21.61%
(per troy ounce)
Wheat (-ZW)			$8.8650			$8.9200			-0.34%			35.81%
(per bushel)
Corn (-ZC)			$7.4375			$7.448			-7.00%			15.04%
(per bushel)
Cotton			$0.7233			0.725			-6.38%			-21.11%
(per pound)
Coffee			$1.7365			1.723			5.40%			-24.38%
(per pound)
Crude oil (-CL)			$91.37			$91.93			-5.29%			-7.55%
(per barrel)