NEW YORK A late afternoon slide pulled stock indexes lower after the Federal Reserve held off on any new steps to boost the economy. The Fed cautioned that strains in global financial markets still pose a danger, a nod to Europes debt crisis.
The Dow Jones industrial average fell 66.45 points, or 0.6 percent, to close at 11,954.94. The Dow dropped more than 70 points in the last hour of trading and had risen as high as 126 points earlier Tuesday after two strong auctions of European debt.
The Standard & Poors 500 index fell 10.74 points, or 0.9 percent, to 1,225.73. The Nasdaq composite fell 32.99 points, or 1.3 percent, to 2,579.27.
The Federal Reserve portrayed the U.S. economy as slightly healthier but cautioned that it remains vulnerable to the European debt crisis.
Strains in global financial markets continue to pose significant downside risks to the economic outlook, the Fed said. Stock indexes turned lower after the Fed released its policy statement at 2:15 p.m.
Stocks had been higher for most of the day after the Spanish government was able to sell short-term debt at much lower interest rates compared with a month ago, a signal that markets are becoming less fearful about the governments ability to repay its debt.
In its first sale of short-term bills, the European Financial Stability Fund raised 1.9 billion euros ($2.6 billion) from investors at an average rate of 0.22 percent. Thats below the rate Germany pays for the similar bills.
This is an amazing success, Carl Weinberg, chief economist at High Frequency Economics, wrote in a note to clients.
The Dow sank 162 points Monday when Moodys and Fitch warned that the fiscal agreement reached last week among European leaders fell far short of what was needed to contain that regions debt crisis.
Barring any big news out of Europe, stocks are likely to be stuck in a range for the rest of the week, said Tim Hoyle, director of research at Haverford Investments. Trying to guess which way the market is going to go any day is a fools errand, he said.
The Commerce Department reported Tuesday that retail sales rose for the sixth consecutive month in November. Sales increased just 0.2 percent, below what analysts had expected. But the government also revised the previous months slightly higher. Hoyle called that the encouraging part.
It reassures you that the economy is going in the right direction, Hoyle said.
Consumer discretionary stocks fell more than the rest of the market. Electronics retailer Best Buy plunged 15 percent. The company said its third-quarter income sank 29 percent as it cut prices on tablets and TVs to drive sales and traffic during the busy holiday season.
Energy giants made gains as crude oil climbed back above $100. Exxon Mobil Corp. and Chevron Corp. added half a percent.