NEW YORK — Stocks fell for a fourth day Tuesday as concerns over a slowdown in China and talks about a bailout for Irish banks combined to push the Dow Jones industrial average to its lowest level in a month.
Asian markets started a global sell-off after South Korea’s central bank raised interest rates to curb inflation. Shares also fell in Shanghai and Hong Kong as speculation spread that China will take more steps to rein in its red-hot economy, which would dampen global demand for industrial goods.
“The fact that China is taking actions to tighten things up over there is having a big ripple effect here,” said Bruce Simon, chief investment officer at Ballentine Partners.
The Dow Jones industrial average fell 178.47, or 1.6 percent, to 11,023.50, having dipped below 11,000 earlier in the day for the first time since Oct. 20. The Standard & Poor’s 500 fell 19.41, or 1.6 percent, to 1,178.34, while the Nasdaq composite fell 43.98, or 1.8 percent, to 2,469.84.
All 10 industry groups in the Standard and Poor’s 500, the index followed by most professional money managers, fell. Companies in the materials and energy industries lost the most ground, each falling more than 2 percent.
While Asian countries are dealing with excessive economic growth and inflation, European finance ministers were concerned that Ireland would be the latest European nation to need a bailout. The country has refused outside financial assistance.
A fiscal crisis earlier this year in Greece resulted in a global swoon in stock prices as investors questioned the viability of the euro.
Greece was eventually bailed out in May by fellow European nations and the International Monetary Fund.
Ireland’s situation is different from Greece’s, but their respective debt crises are having similar effects on markets. As new doubts emerge about Europe’s ability to keep its financial system sound, investors are abandoning the euro, flocking to the dollar, dumping risky assets such as stocks and sending borrowing rates for countries they see as credit risks soaring.
Ireland is staggering under the costs of nationalizing three banks after that country’s real-estate boom imploded.
“It’s been simmering for a while,” Scott Brown, chief economist at Raymond James & Associates, said of the European debt problems. “Now it’s coming to a complete boil.”
He said Ireland is more troublesome for Europe than Greece because more of Ireland’s debt is held by major banks, especially in England.
A default by Ireland could be another blow to banks that have only recently recovered from the global credit crisis. Shares of British banks HSBC and Barclays fell more than 3 percent.
There are also fears that if Ireland needs a bailout, it will spook investors who hold debt from other European countries.
Ireland is a “precursor to Spain,” said Quincy Krosby, a market strategist at Prudential Financial. “It’s a precursor to Portugal (as well).”
