WASHINGTON -- The stock market is on its longest losing streak since the financial meltdown of 2008, confronted almost every day by fresh evidence that the economy is in serious trouble again.
The Dow Jones industrials declined more than 265 points, their worst day in more than two months, and closed below 12,000 for the first time since June 24.
Investors sold all day after a report that the economy, which is barely growing and straining to produce jobs, is getting almost no help from consumer spending. Americans spent less in June for the first time in almost two years.
The big declines in the stock market came despite the formal end of weeks of uncertainty over whether Congress would raise the federal government's borrowing limit. President Barack Obama signed into a law a bill that raises the debt ceiling and promises more than $2 trillion in cuts to government spending over the next decade.
But investors were more worried about the economy, and the sell-off only accelerated. It was the eighth consecutive daily drop for the Dow and seventh for the Standard & Poor's 500 index, in both cases the longest since October 2008.
During its eight-day decline, the Dow has lost 858 points, or 6.7 percent. The average closed at 11,866.62 and is now up just 2.5 percent for the year. The S&P 500 closed at 1,254.05, and is now down slightly for the year.
"The market is starting to wonder where the growth is going to come from," said Nick Kalivas, a vice president of financial research at MF Global. "It hasn't hit the panic button yet, but that's where we're drifting."
The spending decline in June came after a report last week that the economy grew at an annual rate of less than 1 percent in the first six months -- the slowest since the end of the Great Recession in June 2009.
The yield on the 10-year Treasury note fell to a low for the year of 2.62 percent from 2.75 percent Monday. Investors bought Treasury securities, which are considered safe, because of the economic worries. That drove prices up and yields, which move the opposite way, down. Gold, another asset investors buy when they're worried about the economy, gained 1.4 percent to $1,645 an ounce.
Some investors say that there's a strong likelihood both the Dow and S&P indexes will decline further this year because the economy is not as strong as they thought it was in June.
Last year, when the economy slowed sharply, the Federal Reserve began a bond-buying stimulus program. That was credited with helping the U.S. economy avoid another recession. Now, the Fed has indicated it does not have plans to implement another round of what is called monetary stimulus. And the new focus on deficit reduction in Washington makes it even less likely that Congress would approve any fiscal stimulus.
Paul Dales, senior U.S. economist at Capitol Economics, said he expects the economy to remain bumpy.
That's a fine line for most Americans. Many of them still feel as if the economy remains in recession. At the same time, corporations have continued to report strong earnings and amassed huge cash stockpiles.
"What worries me is that businesses are deriving their strong earnings growth through productivity gains, limited wage increases and foreign activities," economist Joel Naroff said. "While that may be good for an individual firm, when most companies do that, income gains become so limited that spending and ultimately growth fades."