NEW YORK (AP) — The stock market extended its longest and deepest slump of the year Tuesday, caught between a recurring nightmare of European debt and the beginning of uncertain corporate earnings reports at home.
The Dow Jones industrial average fell 213.66 points, its biggest decline of the year and third triple-digit loss in four days. It closed at 12,715.93, its lowest since Feb. 2.
A five-day losing streak has shaved about 550 points off the Dow, about half what it gained from January through March.
In Europe, concern about the financial health of Spain intensified, and borrowing costs for both Spain and Italy rose considerably. Spain's borrowing costs crept closer to levels that forced other countries to seek bailouts.
"They've managed to put a Band-Aid on the debt crisis, but there's really no solution," said Colleen Supran, a principal at the investment adviser Bingham, Osborn & Scarborough. "And Spain is a much bigger problem than Greece."
The yield on 10-year Spanish bonds rose to almost 6 percent. The point at which governments can no longer afford to raise money on the international bond markets and must seek bailouts is generally considered to be 7 percent.
The 7 percent level forced Greece, the last focal point of the European debt crisis, to seek rescue loans. But Spain's economy is more than five times as large as Greece's.
In the United States, investors were waiting for what was expected to be a weak earnings report from Alcoa, the aluminum maker, scheduled for just after the closing bell. When it came in, however, the company reported a surprise profit, and its stock price jumped in after-hours trading. Alcoa is the first of the 30 stocks in the Dow to report its quarterly results.
The company reported net income of $94 million, or 9 cents a share. Analysts expected a loss of 4 cents per share. Revenue totaled $5.96 billion. Analysts predicted revenue of $5.77 billion.
When more earnings reports begin rolling in, analysts think they will reflect slowing growth in China and a tottering Europe. But "a lot of these companies are in a good spot," said JJ Kinahan, chief derivatives strategist for TD Ameritrade in Chicago.
"There seems to be this black cloud as everyone talks about the market," Kinahan said.
He noted that stocks are still well ahead for the year. The S&P 500 was up 8 percent even counting Tuesday's decline. The Dow was up more than 4 percent and the Nasdaq 15 percent.
The low expectations for earnings could also be a blessing in disguise. Companies may have an easier time beating them, which can drive up their stock price, at least temporarily.
"CEOs have done a very good job of setting expectations low," Kinahan said.
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