An up-and-down day on Wall Street ended in the red on Tuesday as the Dow tumbled to fresh 12-year lows amid the latest bank selloff and abysmal housing and auto news.

Today’s Markets

The Dow Jones Industrial Average lost 37.27 points, or 0.55%, to 6726.02, the S&P 500 fell 4.49 points, or 0.64%, to 696.33 and the Nasdaq Composite sank 1.84 points, or 0.14%, to 1321.01. The consumer-friendly FOX 50 fell 4.01 points, or 0.76%, to 526.49.

While the Dow closed with just minor losses and the Nasdaq Composite was essentially unchanged, Wall Street still failed to rebound from a five-day slide that has erased 600 points from blue-chip index. Economic and financial jitters on Monday sent the Dow down 300 points and the S&P 500 off by more than 4%.

“If you have a day where the market is down 4%, but you can’t recover from that, then things are in tough shape," said Art Hogan, chief market strategist at Jefferies & Co. 

Aside from a 3% tumble for financial stocks and new data showing a record low for pending home sales, the markets were once again focused on a litany of speeches from regulators in Washington, which is increasingly giving Wall Street its cues. 

Washington has "really been driving the market, even more so than corporate news," said Hogan. "Until we get clarity, it’s impossible for anyone to get a hold of market fundamentals. That’s really the universe we are living in." 

Amid negative market sentiment and fears about the length and depth of the recession, the Dow has lost more than 15% of its value over the past 13 sessions, diving on Tuesday to its lowest closing level since April 1997. 

General Electric (GE) and Home Depot (HD) posted the biggest percentage losses on the benchmark index Tuesday. Defensive stocks like Coca-Cola (KO) and Merck (MRK) also tumbled. On the other hand, Disney (DIS) and American Express (AXP) enjoyed the biggest gains on the index. 

The Nasdaq Composite, which still has not breached its November lows, ended flat as big gains from tech heavyweights like BlackBerry maker Research in Motion (RIMM) and Dell (DELL) helped keep the index afloat.

D.C. Takes Center Stage

In testimony on Tuesday, Federal Reserve Chairman Ben Bernanke reiterated the need for aggressive government intervention, saying an economic recovery hinges on it. "The alternative could be a prolonged episode of economic stagnation that would not only contribute to further deterioration in the fiscal situation, but would also imply lower output, employment, and incomes for an extended period," said Bernanke. 

Even President Barack Obama weighed in on the markets' recent slump, telling reporters on Tuesday he is not basing his policies on the markets’ “fits and starts." He added: “Profit and earning ratios are starting to get to the point where buying stocks is potentially a good deal if you have a long-term perspective.”

Financial stocks fell to new lows even after digesting new details trickling out about the Treasury Department’s plan to remove banks' toxic assets, which has been a point of great uncertainty for the markets. According to The Wall Street Journal, officials are considering establishing several investment funds that will be run by private investment managers but partially financed by the government, which would share in profits and losses.

Separately, the government launched a highly-anticipated consumer lending facility Tuesday aimed at boosting credit for auto, education and credit card loans by up to $1 trillion. 

Data, Autos Weigh on Street

Tuesday's lone economic report was even bleaker than Wall Street had been bracing for. The National Association of Realtors said pending home sales fell by a worse-than-expected 7.7% in January to a record low despite lower mortgage rates. Home builders like Toll Brothers (TOL) and KB Home (KBH) extended losses on the report. 

Meanwhile, Detroit provided Wall Street with yet another reminder of how weak consumer confidence and the tight credit markets have impacted sales of big-ticket items. General Motors (GM) reported a 52.9% plunge in February sales from a year ago, its worst February since 1967. Ford (F) and Toyota (TM) posted their steepest monthly sales plunges of the current downturn, reporting 48.4% and 40% sales drops respectively. 

In the commodity markets, oil rebounded modestly from its worst day in two months, providing the energy sector with a boost. The price of a barrel of crude closed at $41.65 per barrel, up $1.50 on the day. On the other hand, gold fell for the seventh straight day, its longest losing streak since October. Gold settled at $912.90 per ounce, down $26.10. 

Corporate Movers

Blockbuster (BBI) lost three-quarters of its market value after Bloomberg News reported the company has hired legal council to explore a possible bankruptcy filing. However, Dow Jones Newswires reported the law firm is helping with capital raising initiatives and Blockbuster does not intend to file for bankruptcy.

Citigroup (C) unveiled a new foreclosure mitigation program that will temporarily lower mortgage payments for some newly laid off homeowners. Citi, which has received $45 billion in bailout cash, will lower payments to an average of $500 a month for certain delinquent borrowers.

General Motors (GM) is poised to announce plans to buy Delphi’s global steering business as part of a restructuring of both companies, the Journal reported. GM, which may need approval from the government, is expected to try to sell the business as soon as possible, the newspaper reported.

Toyota (TM) is seeking a $2.1 billion loan from the Japanese government to help its finance arm cut funding costs, according to Reuters.

Apple (AAPL) introduced a new Mac Pro PC starting at $2,499 that will use Intel’s (INTC) “Nehalem” xeon processors. The tech heavyweight also said it has updated its iMac and Mac mini desktop lines, including a 24-inch iMac priced at $1,499.

Walgreen (WAG) posted a 1.9% drop in February same-store sales, falling shy of expectations for a more modest 0.5% decline.

AutoZone (AZO) beat the Street with a fourth-quarter profit of $2.03 a share as the auto parts supplier said sales jumped 8.1% to $1.45 billion.

Genzyme (GENZ) fell to fresh 52-week lows a day after the biotech company said its 2009 earnings could be hurt by an FDA rejection of its new Lumizyme treatment. 

Global Markets

European markets slumped for the third straight day, tumbling to fresh multi-year lows. The Dow Jones Euro Stoxx 50, which tracks the 50 largest companies in Europe, fell 0.96% to 1864.73, London's FTSE 100 plunged 3.14% to 3512.09 and Germany's DAX fell 0.54% to 3690.72.

In Asia, Japan's Nikkei 225 fell 0.69% to 7229.72 while Hong Kong's Hang Seng took the brunt of the losses overnight, tumbling 2.3% to 12033.88. Australia's ASX 200 lost 0.95% to 3219.20.