NEW YORK (AP) — U.S. stocks fell sharply on Tuesday, led by declines in energy and materials stocks as commodities prices sank. Prices for oil and copper fell sharply after China's government lowered the value of its currency, suggesting weakness in the world's second-largest economy. Google gained after the company announced a restructuring.
KEEPING SCORE: The Standard & Poor's 500 index fell 24 points, or 1.2 percent, to 2,079 as of 2:50 p.m. Eastern time. The S&P 500 is on track for its biggest drop in a month. The Dow Jones industrial average lost 240 points, or 1.4 percent, to 17,373. The Nasdaq composite index fell 82 points, or 1.6 percent, to 5,018.
CHINA'S DEVALUATION: Beijing's move allowed the yuan to fall 1.9 percent, the biggest one-day drop in a decade. In recent months, the yuan has strengthened along with the U.S. dollar, hurting Chinese exporters. China's exports fell by an unexpectedly large 8.3 percent in July. The People's Bank of China said market forces would be given a bigger role in setting the exchange rate, leaving open the possibility of more declines. China's yuan was valued at 6.32 per dollar on Tuesday, compared with 6.21 per dollar a day earlier.
THE QUOTE: "The Chinese government will do whatever is necessary to keep the Chinese economy on course," said John Manley, chief equity strategist at Wells Fargo Fund Management. "People are reading this as a signal that their economy needs more help."
Manley also said that the move lower in stocks may have been exacerbated as traders sold following a big jump in prices on Monday.
NOT SO TASTY: Yum Brands, the owner of the KFC and Taco Bell chains, was among the biggest decliners in the S&P 500. The fast-food company gets more than half of its sales from China, according to data from FactSet. The company said last month that it was expecting a strong second-half of the year in China. Yum fell $4.43, or 5.1 percent, to $83.28.
THE ABC: Google was the biggest gainer in the S&P 500 after the tech giant announced a new corporate structure that included separating its lucrative Internet business from some of its more speculative research projects. Investors welcomed the increase in transparency that will give them a better idea of how the technology giant spends its cash. The new parent company will be named Alphabet. Google's stock gained $30.07, or 4.5 percent, to $693.20.
FLYING HIGH: Airlines were among the biggest gainers as oil prices fell again. Fuel is one of the biggest expenses for airlines and lower fuel costs typically mean higher profits for airlines. American Airlines rose $1.47, or 3.5 percent, to $43.17. Southwest Airlines gained 95 cents, or 2.5 percent, to $38.75.
BONDS AND CURRENCIES: The dollar gained to 124.85 yen from 124.82 yen Monday. The euro rose to $1.1045 from $1.1021. U.S. government bond prices rose, pushing the yield on the 10-year Treasury note down to 2.13 percent from 2.23 percent on Monday.
GREECE DEAL: Greece says it has reached an agreement with its international creditors on the broad terms of a new bailout deal. The news pushed Greek stocks up 2 percent and sent yields on Greek government bonds sharply lower, an indication investors are less worried about a default. Officials expect the deal to be finalized Tuesday.
EUROPE'S DAY: Other European markets were mostly lower. France's CAC-40 fell 1.9 percent, and Germany's DAX lost 2.7 percent. Britain's FTSE 100 shed 1.1 percent.
ENERGY: Benchmark U.S. crude fell $1.88 to $43.08 per barrel on the New York Mercantile Exchange, its lowest closing price in more than six years. As well as falling due to concerns about demand, oil also dropped as an OPEC report showed that the cartel's production rose to a three-year high in July.
METALS: Gold climbed $3.60 to $1,107.70 an ounce and silver was little changed at $15.28 an ounce. Copper dropped 6.9 cents to $2.33 per pound.