U.S. stocks tumble on renewed concerns over European banks

The U.S. stocks tumbled on Tuesday, with all major indexes falling over 1 percent, as renewed concerns about the health over European banks weighed on the market.

The Dow Jones industrial average fell 107.24 points, or 1.03 percent, to 10,340.69. The Standard & Poor's 500 index lost 12.67 points, or 1.15 percent, to 1,091.84 and the Nasdaq was down 24.86 points, or 1.11 percent, to 2,208.89.

Trading volume was extremely light, with about 3.2 billion shares changing hands in New York Stock Exchange composite trading, making it the third-lightest day of the year.

Major indexes opened lower after The Wall Street Journal reported that the recent European bank stress tests understated some lenders' holdings of government debt, spurring fresh concerns about the health of European banks.

Concerns about eurozone banks hit financial markets in the spring, but faded during the last few months after the European bank stress tests turned out to be comforting. According to the result, only seven banks failed the tests out of 91, which was much better than people had anticipated. However, there were also doubts on the standard of the tests.

Separately, Germany's banking association said the country's 10 biggest banks may need 105 billion euros of fresh capital to meet new regulations, further hurting the sentiment.

Financial components led the decline, with American Express down 4.1 percent, J.P. Morgan Chase off 2.3 percent and Bank of America down 2.2 percent.

Meanwhile, with no major economic data scheduled for release after the long Labor Day weekend, investors were turning to overseas news for some insight into the global economy.

Data released on Tuesday showed German factory orders fell sharply in July, pointing to growth in Europe's biggest economy leveling off in the coming month.

German manufacturing orders dropped 2.2 percent in July from the prior month as demand for capital goods and orders from abroad dropped off, while economists had expected a 0.4-percent increase in orders.

In this case, investors fled to safe-haven investments, pushing the U.S. dollar higher against most major currencies. However, the Japanese yen rose to a 15-year peak against the dollar, also due to risk aversion.

Source:Xinhua