Dow plunges on Euro debt crisis, Korean conflict

Shares on Wall Street declined Tuesday as heightened uncertainty over conflict in Asia and the debt crisis in Europe sent investors fleeing for safer assets.

The Dow Jones industrial average was down 142.21 points, or 1.27 percent, at 11,036.37. The broader Standard & Poor’s 500-stock index was down 17.11 points, or 1.4 percent, at 1,180.73 while the Nasdaq composite index fell 37.07 points, or 1.5 percent, at 2,494.95.

In Asia, the South Korean military went to “crisis status” and threatened strikes against the North after the North fired shells at a South Korean island.

In Europe, fallout from the sovereign debt crisis continued. The Irish government faced imminent collapse after a signoff on a $100-billion bailout set the stage for a new election. Greece’s international lenders cleared the way Tuesday for Athens to receive an additional installment of its bailout package, saying the government had made progress in cutting the deficit.

FBI agents raided the offices of three hedge funds Monday in the government’s latest move in an investigation of insider trading on Wall Street.

Gordon Charlop, a managing director at Rosenblatt Securities, said the markets were skittish because of events in Asia and Europe, and, to a lesser extent, the government inquiry.

“There is not a lot of good stuff to hang your hat on,” he said.

Analysts said the markets were poised for retreat after recent gains, and that traders were likely to adjust portfolios in low volumes in a short week because of Thanksgiving on Thursday.

Pending a resolution in Korea, “expect Treasuries to take on greater appeal, especially this week, when liquidity will probably be tough to come by if it’s needed,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan & Co. The Treasury’s 10-year note rose 8/32, to 98 23/32. The yield fell to 2.77 percent from 2.80 percent late Monday.