NEW YORK (AP) — Stocks are falling sharply Tuesday on Wall Street following weak earnings reports, a pullback at U.S. factories and fear that Europe’s debt crisis could spiral out of control. The market is heading for its third straight loss.
The Dow Jones industrial average was down 181 points to 12,540 in late afternoon trading Tuesday. Investors around the world dumped stocks and fled to the relative safety of U.S. government debt. The yield on a benchmark Treasury note fell to another record low and the dollar hit a two-year high against the euro.
Stocks fell from the start of trading following news that United Parcel Service had cut its earnings forecast 4 percent for all of 2012. The package delivery company said it expects global trade to slow even more than the global economy this year, a first since the financial crisis. Its stock fell $3.52, or 4.5 percent, $74.43.
Net income at the huge chemical maker DuPont fell 3 percent for the second quarter on slower business in Europe and Asia. DuPont also reported revenue that fell short of Wall Street’s expectations. Its stock lost $1.05, or 2 percent, to $47.66.
The broader Standard & Poor’s 500 was down 17 points to 1,333. The Nasdaq composite was off 30 points to 2,861.
Also weighing on stocks was a survey from the Federal Reserve Bank of Richmond indicating that manufacturing in the central-Atlantic region is contracting. That followed reports of pullbacks in New York and Philadelphia.
“The economic data is raising questions about whether earnings won’t weaken even more,” said Carl Yingst, chief market analyst at Joseph Gunner, an investment bank. “Our guess is we haven’t seen the worst.”
The yield on 10-year Spanish government bonds rose 0.10 percentage point to 7.53 percent, a dangerously high level. Investors are also selling Italian government bonds, sending the yield on that country’s 10-year bond up 0.32 percentage points to 6.54 percent.
Late Monday, Moody’s Investors Service issued a warning about the credit rating for Germany. Moody’s anticipates that strong countries like Germany will have to shoulder a heavy financial burden as they support weaker countries like Spain and Italy. The debts of those countries are considered far too big for current bailout funds to handle.
Investors fear that Madrid may become the latest struggling European country to ask for a financial lifeline to pay the government’s bills. Spain has already gotten help from its European partners to shore up its banks.
In cutting its outlook on Germany, Moody’s also said there was an “increased likelihood” that Greece would leave Europe’s monetary union. Reuters is reporting that two European Union officials expect that Greece would not be able to pay its debts even after it received significant amounts of debt relief and financial support from its neighbors.
If stocks continue to fall, it will be the third day in a row of losses for the U.S. stock market. If the Dow doesn’t recover, it will be the third day in a row of triple-digit losses. The last time that happened was in September, when some economists feared the U.S. was on the brink of another recession.
As they dump stocks, investors have been piling into U.S. government bonds. On Tuesday, the yield on the 10-year Treasury note fell to 1.40 percent, matching the record low it reached Monday.
Investors have also been selling the euro. In early afternoon trading Tuesday, the euro was fetching $1.20, a two-year low against the dollar.
In corporate news, AT&T and Whirlpool both fell short of analyst estimates of earnings and revenue. AT&T fell $1.05 cents, or 3 percent, to $34.34. Whirlpool, the world’s biggest appliance maker, dropped $5.14, or 8 percent, to $62.17.
So far this earnings season, nearly seven of ten companies that have reported have beaten earnings estimates, slightly higher than is usual, according to S&P Capital IQ, a research firm. But companies have fallen short of expectations of revenues as the global economy slows, and that is spooking some investors.
Some other companies in the news:
— Altria Group said its net income nearly tripled in the second quarter. Stock in the maker of Marlboro cigarettes was flat at $35.48.
— Cisco Systems fell the most of the 30 stocks in the Dow, more than 5 percent, after the network equipment maker announced its latest round of staff cuts. Cisco dropped 92 cents to $15.15.
— DeVry plunged $6.80, or 25 percent, to $20.76, the biggest drop in the S&P 500 index. The for-profit education company said enrollment is falling, forcing it to cut 570 jobs. The company also projected that its profit for the latest quarter will come in well short of analyst estimates.
After the closing bell, Apple and Netflix are scheduled to report earnings.