Dow Slides as Japan Fears Send Investors Scrambling

JONATHAN CHENG KRISTINA PETERSON

NEW YORK—U.S. stocks plunged as deepening worries over the specter of a nuclear power crisis in Japan and its economic implications sent investors scurrying again for safety.

Stocks and commodities plummeted around the world Tuesday following a more than 10 percent decline in Japan's Nikkei average. Paul Vigna, Dave Kansas and Kristina Peterson have details.

The Dow Jones Industrial Average sank 202 points, or 1.7%, to 11784, while the Standard & Poor's 500-stock index lost 22 points, or 1.7%, to 1274. Stocks had initially tumbled more, with the Dow posting its biggest intraday loss of the year, before slightly paring its slide in late morning trading.

All of the Dow's 30 components were in the red. Shares of General Electric dropped 3.9% to lead the declines, amid concerns about the company's involvement in the design of all six reactors at the Fukushima Daiichi nuclear plant in Japan.

All 10 sectors of the S&P 500 were in negative territory, and only 19 companies within the index were trading higher.

Tech and industrial stocks posted the heaviest losses. Alcoa fell 2.6%, Intel declined 3.6%, Caterpillar shed 2.1% and 3M lost 2.9%.

Insurers were also under pressure as concerns grew about the rising costs in Japan. Aflac fell 9.6%, Hartford Financial shed 6%, MetLife dropped 5.1% and Prudential Financial fell 5.6%.

WSJ's Isabella Steger and Jonathan Casey join the News Hub and report on the global impact of the 11% drop by Japan's Nikkei Index.

The Nasdaq Composite, meanwhile, tumbled 46 points, or 1.7%, to 2655, dipping briefly into negative territory for 2011.

The selloff came after news of two more explosions at Japan's Fukushima Daiichi nuclear-power plant that released large amounts of nuclear material into the atmosphere. Prime Minister Naoto Kan warned of "substantial" radiation leaks. Tokyo also suffered another earthquake of 6.1 magnitude in the late evening.

Investors said the mounting damages and risks from the disasters continued to inject new sources of anxiety into the market.

Japan's Nikkei slumped 11%, dragging regional and global benchmark indexes down, on concerns over the country's radiation levels. WSJ's Jake Lee and Isabella Steger discuss.

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"This is a tragedy of immense proportion but we still don't know exactly what the parameters of that are," said Fred Fraenkel, vice chairman of Beacon Trust Company. "It's evolving and getting worse and we don't know where it will end or how it will end," he said. Still, he said, the economic blow to Japan should not derail long-term growth in other countries.

"Even in a worst case, dire scenario, which would be horrible for Japan, it probably would not abort the worldwide recovery," he said.

In Japan, the Nikkei Stock Average plunged more than 14% at its lows on Tuesday, setting off circuit breakers at the Osaka Securities Exchange to halt trading. The index closed down 11% in its biggest one-day percentage loss since the Oct. 16, 2008 during the aftermath of the global financial crisis.

The tumble sparked broad declines in Asian and European markets. Germany's DAX 30 index was particularly hard hit, dropping 3.9% in intraday trading. The Japanese selloff hurt sentiment across Asia, where Hong Kong's Hang Seng index closed down 2.6% and South Korea's Kospi fell 2.4%.

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Markets around the world are reacting to the aftermath of the earthquake and tsunami in Japan.

In the commodity markets, crude-oil prices tumbled to below $99 a barrel. Gold dropped to $1393 an ounce.

In U.S. economic news, New York manufacturing activity continued to expand in March, with more businesses raising prices in the face of higher costs, with a survey of business conditions handily beating expectations. The index for employment also jumped to a reading of 9.09 from 3.61 in February. But profit margins remained under intense pressure.

U.S. import prices also rose more than expected in February as costs increased for energy, industrial supplies and food. The price of goods imported to the U.S. climbed by 1.4% from the month before, the Labor Department said, topping consensus estimates of a 0.9% price increase in February.

Investors were also awaiting the outcome of a monetary-policy meeting by the Federal Reserve.