Dow Falls to Worst Close Since March

Traders surround the post that handles Trizec Properties Inc. on the floor of the New York Stock Exchange, Monday June 5, 2006. Real estate investment trust Trizec Properties Inc. on Monday said real-estate company Brookfield Properties Corp. will acquire both Trizec Properties and Trizec Canada for $8.9 billion. (AP Photo/Richard Drew) (Richard Drew - AP)

The fear among investors is that an over-vigilant Fed will raise rates too far, cooling the economy to the point of recession. Bernanke's communication stumbles have only served to make the market more nervous.

Investors have plenty of other worries, too, including sky-high commodity prices and turbulence in foreign markets.

"You have all these factors going on," said Ralph Acampora, managing director of technical research Knight Capital Group. "What Bernanke said the other day is the pin that hit the balloon."

Some of the stocks that have seen the biggest run-up over the past three years look especially vulnerable now. One of the sectors hit hardest Tuesday was homebuilding, where a group of stocks fell following a downgrade by Wachovia Securities. D.R. Horton Inc., the nation's largest homebuilder by units, fell $1.40, or 5.6 percent, to $23.41; KB Home fell $3.28, or 6.7 percent, to $45.82 and Pulte Homes Inc. fell $1.64, or 5.5 percent, to $28.11 after the downgrade.

Other homebuilders continued to slide as investors remained nervous about the once-hot stocks. Toll Brothers Inc. fell $1.03, or 3.7 percent, to $26.55 and Hovnanian Enterprises Inc. fell 96 cents, or 3.1 percent, to $29.75.

In other company news, IBM Corp. rose 70 cents to $79.76 after the technology company said it would triple its investments in India to $6 billion over the next three years. Chairman and Chief Executive Sam Palmisano said the investment will be used to build service delivery centers in Bangalore, India's technology hub, and create telecommunications research and innovation center for IBM's telecom clients around the world.

Hewlett-Packard Co. fell 69 cents to $30.90 after the company revised its full-year outlook upward, thanks to a favorable tax settlement with the U.S. government. The revised forecast still fell short of analysts' expectations.

Consolidated volume on the New York Stock Exchange came to 2.8 billion shares, up from 2.41 billion on Monday.

The Russell 2000 index of smaller companies fell 2.96, or 0.41 percent, to 710.96.

In other overseas markets, Britain's FTSE 100 fell 1.60 percent, Germany's DAX index dropped 2.11 percent, and France's CAC-40 lost 2.40 percent.

___

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com