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Bears Rip Leaders, Send Stock Indexes Down; Utilities Up

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U.S. stock indexes staggered to hefty losses Tuesday, as utilities provided one of the few hiding places.

The small-cap Russell 2000 led the way down, dropping 2.7%. The Nasdaq followed with a 1.8% loss. The S&P 500 and the Dow Jones industrial average kept their losses at 1.2% and 1.1% respectively. Volume in the stock market today was up sharply from the previous session.

Conservative and defensive groups did best. The Dow Jones utility average rose 1.4%. Among IBD's 197 industry groups, the day's best performers included gold miners, utilities, beverages, food and soap.

The worst performers were steel producers and banks — both heretofore market leaders. Meanwhile, gold futures rode the market worries to a more than 0.8% gain on the Comex to $1,244 a troy ounce.


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Blue chips were down with few exceptions. Losers led winners in the Dow industrial average by a 9-to-1 ratio. The biggest percentage losers in the Dow were Goldman Sachs (GS), Caterpillar (CAT), JPMorgan Chase (JPM) and Boeing (BA), each off nearly 2% to almost 4%.

Coca-Cola (KO) rose almost 1% to 42.50, marking a year-to-date high and good enough to lead all 30 Dow components for the day. Coke retook its 50-day line in February and is now trying to climb above its long-term 200-day moving average. The stock is 9% off its high. A defensive stock, Coca-Cola's annualized dividend yield is 3.5%.

Tuesday provided the worst Nasdaq action in about six months.

Yet in the past six months, the Nasdaq served up similar losses with mixed, near-term effects. On Sept. 9, Oct. 11, Nov. 30 and Dec. 28, the Nasdaq knifed down and closed low in the day's range in rising volume each time.

What were the outcomes? In three cases, the Nasdaq bottomed quickly and resumed its advance. However, in the October case, the Nasdaq dropped 5.7% over four weeks.

Intraday Tuesday, the Nasdaq pulled as much as 3.7% off its high.

According to preliminary data, the put/call volume ratio closed at 1.04, an area that sometimes points to a short-term market bottom.

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