Last-hour jitters extend stocks' slide

NEW YORK — Traders gave in to another case of last-hour anxiety Monday and drove stocks to their lowest level in seven months.

The Dow Jones industrial average, down just 42 points 45 minutes before the session ended, closed down 115, or 1.2 percent.

That extended the Dow's sharp drop from Friday, when it lost 323 in response to a disappointing May jobs report. Broader indexes had steeper percentage drops than the Dow on Monday. The technology-focused Nasdaq composite index fell 2 percent. Treasury prices rose as investors again went in search of safe investments.

There was no obvious catalyst for Monday's late slide, although traders were again preoccupied with Europe's economic problems. Traders know that Europe's business day begins before trading opens in the U.S., and they'd rather sell than wake up to an unpleasant surprise. The last-hour selling, which followed a similar move Friday, also recalled the 2008 financial crisis, when traders decided the best strategy was to dump stocks just before the close.

Monday's trading also showed how the market's own dynamics can trigger late selling. Shortly after 2 p.m. CDT, the Standard & Poor's 500 index fell below 1,056.74, what had been its low close for the year that it reached Feb. 8. That psychological blow encouraged many traders to sell, and as prices came down, computer "sell" programs kicked in, leading to more selling.

Tech stocks, seen as some of the most vulnerable when the economy and the market are troubled, suffered some of the biggest losses. That explains the drop in the Nasdaq index.

But some stocks fell on their own bad news. Google was one of the big tech losers, falling 2.7 percent after Connecticut Attorney General Richard Blumenthal called on the company to "come clean" on its collection of personal and business data in the state for its mapping service.

"The market is playing defense and waiting for some resolution," said Mike Shea, managing partner at Direct Access Partners in New York, pointing to the rise in gold stocks.

Some traders say the market isn't likely to stabilize until there is a better sense about how European countries will hold up under heavy cost-cutting that could hamper their economic growth. Traders again looked to the euro for guidance. The 16-nation currency hit another four-year low. It fell as low as $1.18 before rising to $1.19. A drop in the currency is seen as a sign of flagging confidence in Europe's ability to contain its debt without falling back into recession.

The Dow fell 115.48, or 1.2 percent, to 9,816.49, while the S&P 500 index fell 14.41, or 1.4 percent, to 1,050.47.

It was the lowest close for the Dow and the Standard & Poor's 500 index since Nov. 4.

The Nasdaq composite index fell 45.27, or 2 percent, to 2,173.90. The Nasdaq stands at its lowest level since Feb. 10.

Jim Thorne, chief investment officer for equities at MTB Investment Advisers in Baltimore, said traders are afraid they're seeing a repeat of the financial crisis of 2008. But Thorne said that although the jobs report Friday was disappointing, most numbers have pointed to an economy that is rebounding.

"Right now the market is getting to the point where it's uninvestable. Fundamentals don't matter," Thorne said. "This is a period that will be looked back upon six to eight months from now as a wonderful investing opportunity."