A mixed economic picture sent stocks tumbling Tuesday, with the Dow Jones industrials falling more than 100 points after investors were unnerved by weakness in home sales, consumer confidence and manufacturing.
An upward revision in the fourth-quarter gross domestic product, meanwhile, raised worries about higher interest rates.
The GDP showed that the economy grew at an annual rate of 1.6 percent, much better than the 1.1 percent the Commerce Department initially estimated and beating the 1.5 percent economists predicted. The GDP is the broadest measure of the economy's performance - and one indicator of whether the economy continues to grow fast enough to prompt more interest rate hikes by the Federal Reserve.
"The GDP (gross domestic product) upgrade could put more pressure on the Fed," said Jack Ablin, chief investment officer at Harris Private Bank. "At the same time, we're losing ground with the consumer. . . . From the perspective of today's market, it's a one-two punch."
The Dow fell 104.14, or 0.94 percent, to 10,993.41. Broader stock indicators also fell sharply. The Standard & Poor's 500 index fell 13.46, or 1.04 percent, to 1,280.66, and the Nasdaq composite index fell 25.79, or 1.12 percent, to 2,281.39, hurt by a sharp decline in Google Inc.
Bonds edged higher, with the yield on the 10-year Treasury note falling to 4.55 percent from 4.59 percent Monday. The U.S. dollar fell against other major currencies. Gold prices rose.
Crude oil futures rose. A barrel of light crude was quoted at $61.41, up 41 cents, in trading on the New York Mercantile Exchange.
With scant earnings reports and few Federal Reserve speeches, economic data should continue to dominate the week, said Alexander Paris, economist and market analyst for Chicago-based Barrington Research.
"The problem is, investors have been going back and forth," about economic data, he said, pushing stocks higher on weak economic data one day, then lower on poor data another day.
"Sometimes they think a good economic report is good, other times they think it's bad."
Another hurdle stock bulls face is "resistance levels." As the Dow and S&P 500 flirted with 4 1/2-year highs, those highs have become, effectively, a ceiling for stock prices, with investors selling off their holdings when the indexes neared those highs.
Stocks ended February mixed. The Dow gained 128.55, or 1.18 percent; the S&P rose 0.60, or 0.05 percent; and the Nasdaq lost 24.43, or 1.06 percent.
In 2006, the Dow is up 3.55 percent, the S&P is up 3.67 percent and the Nasdaq is up 4.62 percent.