Stock Slide Punctures 2-Month Streak of Gains

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CBS/AP
A late-day slide broke the stock market's recent calm Wednesday after concerns grew that shares are overheated.

A mix of concerns including a drop in consumer borrowing and a slide in oil prices hit a market that analysts said has been looking tired. The Dow Jones industrial average fell 72 points after repeated attempts this week to cross the psychological threshold of 11,000.

The Dow fell by more than 100 points during trading for the first time since Feb. 25.

Analysts said the market has been due for a drop after two months of steady gains. The benchmark Standard & Poor's index reached an 18-month high on Tuesday. It had risen 12.6 percent in two months. Gains that size often take a year to materialize.

The market found some support in afternoon trading following strong demand at a government bond auction. That sent interest rates lower following a spike on Monday.

But the drop in stocks resumed in the final hour of trading after the Federal Reserve said consumer borrowing fell by $11.5 billion in February. Analysts had expected a modest gain of $500 million. The drop from weakness in credit cards and auto loans raised concerns that consumer spending will remain weak.

Stocks started the day weaker after Greece's borrowing costs rose again Wednesday and its stock market slid on concerns that the country could default on debt if it doesn't contain its budget problems. Greece's debt woes have undermined confidence in Europe's shared currency, the euro, and caused jitters on world markets.

Even with the setbacks triggered by Greece's fiscal crisis, U.S. stocks have been on a nearly unbroken climb for 13 months. The past two months of gains have come mainly from modest moves upward, in contrast to the triple-digit gains that were common early in the market's recovery. Investors have been encouraged by a string of reports showing steady improvement in the economy, including a report that U.S. employers created 162,000 jobs in March, the most in three years.

The Dow had flirted with the 11,000 level in recent days, but hadn't crossed it. It came within 12 points of 11,000 on Monday and Tuesday before retreating.

Mark Coffelt, portfolio manager at Empiric Funds in Austin, Texas, said stocks had been due for a slide after two months of steady gains, but that any drop is likely to be modest because so many investors are waiting to put money in the market.

"We're probably a little overdue for a correction," Coffelt said. "I think it's going to be pretty light as much of the public is underinvested."

According to preliminary calculations, the Dow fell 72.47, or 0.7 percent, to 10,897.52. The Standard & Poor's 500 index fell 6.99, or 0.6 percent, to 1,182.45, while the Nasdaq composite index fell 5.65, or 0.2 percent, to 2,431.16.