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A strengthening greenback, falling commodity prices and disappointing earnings news sent Wall Street crumbling Tuesday. A reported cut by a ratings agency on six Dubai state-connected companies saw Dubai debt concerns resurface.

Expectations are for the Federal Reserve to start lifting interest rates after the middle of next year, though the strengthening dollar against most currencies has convinced some that interest rate rises could come sooner. Officials will meet on December 15 and 16 to discuss the economy, rates and the Fed's financial-rescue efforts.

In economic news, consumer lending dropped for the ninth consecutive month in October. According to the Federal Reserve lending declined $3.5 billion, or 1.7%, means consumer lending as fallen 4% since its July 2008 peak. Before which it had been growing for over 50 years.

The Dow Jones dropped 104.14 points, or 1.00%, to 10,285.97, the S&P 500 shed 11.31 points, or 1.03%, to 1,091.94 and the NASDAQ slid 16.62 points, or 0.76%, to 2,172.99. 

Financials lost ground for a second day. Citigroup and Bank of America fell 3% each, while Wells Fargo shed 1.3%.

3M dipped 1% despite the diversified conglomerate announcing a 2010 profit forecast that was within or better than analysts' expected range. General Electric lost 2.2%.

FedEx rallied 2.7% after the package shipper increased its earning guidance by over 10% due to better-than-expected growth in certain divisions.

Grocery story chain Kroger slumped 11.9% after reporting a third-quarter loss compared to a profit a year earlier. The company also cut its full-year forecast.

Safeway dropped 6.8%.

In automotive news, General Motors said it may payback government loans totalling US$6.7 billion in one lump sum rather than on a quarterly basis.

Ford shares slid 1%.

Energy stocks dropped as the price of crude lowered for a fifth straight day. Exxon Mobil, Chevron and ConocoPhillips lost between 1.1% and 1.8%.  

COMEX gold for February delivery fell US$20.60 to settle at US$1,143.40 an ounce. It was the third successive day the price of the metal had weakened.

Barrick Gold and Newmont Mining fell 4.6% and 2.9%.

European Markets

European stocks closed lower as Dubai debt concerns and a Fitch ratings downgrade on Greece hit the banks hard. An unexpected fall in German industrial output during October also weighed on the market.

The UK benchmark FTSE 100 fell 87.53 points, or 1.65% to 5,223.13. The French CAC40 shed 54.75 points, or 1.43% to 3,785.30, while the German DAX lost 96.17 points, or 1.66% to 5,688.58.

Banks struggled over concerns of exposure to Dubai World. The largest underwriter of loans to Dubai, Royal Bank of Scotland, slumped 7.7% to an eight-month low.

UK peers Barclays and HSBC shed 3.2% and 2.5%.

Deutsche Bank, BNP Paribas and Societe Generale lost 2%, 1.6% and 1.2% respectively.

Insurer AXA dropped 2.3%.

Another fall in the price of crude sent energy stocks lower. BG Group weakened 2%, while BP, Royal Dutch Shell and Total were between 1.1% and 1.5% in the red.

Xstrata and Anglo American led the miners lower with falls of 3.5% and 3.2%. Metals prices dropped on the London Metals Exchange.  

Aussie peers BHP Billiton and Rio Tinto dipped 2.8% and 2.6%.

Tesco shed 2.3% after the retailer reported quarterly sales growth that was at the bottom end of guidance.

Japanese Markets

The Nikkei’s six-day rally came to an end on profit-taking and as a strengthening yen placed pressure on exporters. The market also reacted to US Federal Reserve Chairman Ben Bernanke’s comments the previous day that the US economy was facing “formidable headwinds”.

The government unveiled a US$81 billion economic stimulus package.

The Nikkei 225 slid 27.13, or 0.27% to 10,140.47.

Mazda Motor and Nissan fell 2.3% and 0.9%. It was Nissan’s first decline in seven sessions.

Canon dipped 1.1%. Sony and Panasonic put on 1.2% and 0.4%.

Fast Retailing lost 1.9%.

Among the heavyweight banks Mizuho Financial Group and Sumitomo Mitsui Financial Group weakened 2.3% and 1.9%. Mitsubishi UFJ Financial Group added 0.4%.

Nippon Yusen K.K. sank 5.7% as the Baltic Dry index lost ground for the first time in four days. Kawasaki Kisen Kaisha and Mitsui O.S.K. Lines dropped 5.4% and 3.3%.

Hong Kong Markets

The Hong Kong market closed lower for a third straight session Tuesday as investors sold the banks on concerns the government wouldn’t help to boost capital. Consumer stocks, meanwhile, also lost ground on concerns the US recovery was stalling.

The Hang Seng shed 264.44, or 1.18% to 22,060.52.

Bank of China slumped 1.6%, while Europe’s largest bank HSBC sank 2%. Heavyweight lender ICBC split the two with a 1.8% drop.

Bank of Communications bucked the trend, adding 1%.

Foxconn International Holdings lost 2.8% as investors booked profits following Monday’s 17% surge.

It was a similar story for Huiyuan Juice, which lost 7.6%, following a 19% rally the day before after reports came out a key investor was looking to increase its stake in the drink maker.

The autos continue to go from strength to strength with the Geely Automobile up another 6%.

On the downside shippers lost ground as the Baltic Dry Index, a measure of shipping costs, finished lower.

China Cosco Holdings slumped 3.3%, while Pacific Basin Shipping retreated 1.6%.

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Market Watch by egoli