Wealth Finance

Stocks closed lower Tuesday following new worries about Europe’s debt problems. Treasury prices rose and gold settled at a new high as investors sought out safe assets.

With little economic news in the U.S. following the Labor Day weekend, traders were focused on developments overseas. European stocks fell following news reports that banks there may have more risky government debt on their books than was disclosed during “stress tests” earlier this year. That could mean fees from regulators and more capital-raising by the banks to bolster their balance sheets.

“The soundness of stress tests are, and continue to be, in question,” said Brian O’Reilly, president of the Collingwood Group. Uncertainty about the tests could be a drag on the market until European regulators provide some more transparency about exactly what figures were included in the test, O’Reilly said.

Shares of European banks mostly fell and the dollar rose against the euro.

The reports renewed worries about Europe’s government debt, which had flared up earlier this year following a fiscal crisis in Greece that spread to other weak European economies including Portugal and helped bring stock prices down worldwide.

According to preliminary calculations, the Dow Jones industrial average is closing down 107.24 points, or 1 percent, at 10,340.69

The S&P 500 index lost 12.67, or 1.1 percent, to 1,091.84, while the Nasdaq fell 24.86, or 1.1 percent, to 2,208.89

About three stocks fell for every one that rose on the New York Stock Exchange, where volume was very light at 830.3 million shares.

Several reports later this week could shed more light on the U.S. economy including the “beige book” report from the Federal Reserve coming out on Wednesday and weekly unemployment numbers due out on Thursday.

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