Dow closes below 10,000 on signs of stalled recovery

Stocks and interest rates plunged Tuesday after signs of slowing economies from China to the U.S. spooked traders who were already uneasy about a global recovery. The Dow Jones industrial average fell 268 points, or 2.7 percent, and dropped below 10,000. The benchmark Standard & Poor’s 500 index dropped 3.1 percent to close at its lowest level since October.

Interest rates fell in the Treasury market after demand for the safety of government debt grew. The yield on the 10-year note sunk to 2.95 percent, the first time it has fallen below 3 percent since April 2009.

The yield is used as a benchmark for many consumer loans and mortgages. The yield on the two-year note hit a new low.

The markets began the day by following Asian and European stocks lower. Asian exchanges fell after an index that forecasts economic activity for China was revised lower. European stocks continued the slide after Greek workers walked off the job to protest steep budget cuts.

Then, shortly after U.S. trading began, the market was hit with news that consumer confidence fell sharply this month because of worries about jobs and the overall economy.

Investors are also anxious as they wait for the Labor Department’s monthly employment report Friday. The government is expected to say that the jobless rate rose 0.1 percentage point to 9.8 percent in June.

 

Tesla Motors stock takes off after IPO reaps $226 million

Shares of Tesla Motors Inc. gained more than 40 percent in their public trading debut Tuesday after the electric car manufacturer raised more money than expected in its initial stock offering.

Investors snapped up Tesla’s shares even as the broader markets took a beating. The stock soared $6.89, or 40.5 percent from its offering price, to close at $23.89 — marking the second-biggest first-day gain among initial public offerings this year.

The electric car maker, based in Palo Alto, Calif., is the first U.S. automaker to go public since Ford Motor Co. held its initial public offering in 1956. The offering raised $226.1 million after selling 13.3 million shares priced at $17 apiece. Tesla had earlier expected to price just 11.1 million shares at $14 to $16 per share.

 

Merck & Co. wins first trial brought by state over Vioxx

Drugmaker Merck & Co. on Tuesday won the first trial over withdrawn painkiller Vioxx brought by a state trying to recoup what it paid for residents on Medicaid to take the drug, arguing it wouldn’t have been covered had its risks been better known.

U.S. District Court Judge Eldon Fallon in New Orleans ruled for Whitehouse Station, N.J.-based Merck in a 2005 case brought by the Louisiana Attorney General’s Office, one of more than 12 such government suits.

New Orleans attorney James R. Dugan II, the lead attorney for Louisiana, said his team would be meeting with state officials later this week to discuss appellate possibilities.

In his ruling, Fallon noted that even though pain relievers in the same class as Vioxx were all required by the Food and Drug Administration to carry a warning about cardiovascular risks, Louisiana health officials never restricted payments for those drugs.

The judge also ruled that “the weight of the evidence indicates that Vioxx has gastrointestinal benefits” and that Merck’s marketing was consistent with that evidence.

 

Oil, other energy prices fall with consumer confidence

Oil prices plummeted Tuesday as ebbing consumer confidence in the economic recovery set off concerns about gasoline demand for the busy summer season.

Benchmark crude oil fell $2.31, or 3 percent, to settle at $75.94 on the New York Mercantile Exchange. Other energy prices also retreated.

Prices earlier fell in Asia on concerns of an economic slowdown in China. The selling picked up steam in New York after a closely watched measure of consumer sentiment about the economy had its sharpest decline since February.

On the plus side, falling oil prices could lead to a discount at the pump for drivers before the July Fourth holiday weekend.

 

Cisco Systems aims to debut tablet computer for business

Thanks to Apple Inc.’s iPad, tablet computers are finally a hot consumer item, after many false starts. On Tuesday, Cisco Systems Inc. said it aims to take the tablet computer into the business world with its own device, to launch early next year.

San Jose, Calif.-based Cisco, the world’s largest maker of networking equipment, said its tablet, the Cius, has been in the works for 18 months.

The Cius will have a 7-inch screen, making it smaller and lighter than the iPad. While the iPad has no camera, the Cius will have two. Videoconferencing on the go will be a major focus of the product, said Barry O’Sullivan, senior vice president of Cisco’s Voice Technology Group.

The Cius will run Google Inc.’s Android software.

The tablet will be able to connect to Wi-Fi hot spots and cellular broadband networks.

O’Sullivan said Cisco’s goal was to sell the Cius for less than $1,000.

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