Stocks snapped a two-day winning streak Wednesday as a downgrade on Portugal's credit rating sent the dollar higher and stocks and commodities lower.
The Dow shed 52.68, or 0.5 percent, to close at 10,836.15. The S&P 500fell 0.6 percent, with telecom, consumer staples and utilities the worst-performing sectors. TheNasdaq lost 0.7 percent.
P&G , Verizon and Merck were the biggest percentage decliners on the Dow; Bank of Americaand DuPont were among the handful of gainers.
Bank stocks were the only gainer among 10 key S&P sector indexes.
Bank of America shot up more than 2 percent after CEO Brian Moynihan said the company plans to expand in China and elsewhere in Asia. At 1pm, the bank is expected to announce a program to start forgiving mortgage-loan principal for troubled homeowners.
Citigroup shares pushed higher after a wobbly morning after the company agreed to pay a $1.25 million fine to settle allegations by 35 U.S. states that its CitiFinancial unit failed to report 91,127 residential mortgage loans to the federal government as required by law.
JPMorgan, meanwhile, is close to a deal with the FDIC that could result in a $1.4 billion tax refund, the Wall Street Journal reports.
MF Global shares jumped more than 10 percent following news that Jon Corzine, the former Goldman Sachs CEO and New Jersey governor, was named chairman and CEO of the futures and options broker, which has posted a loss for the last four quarters.
GE got a boost after
Boeing shares advanced as the Pentagon is considering a multiyear purchase of the company's F-18 fighter planes and as Macquarie Research raised its rating on the stock to "outperform" from "neutral."
This came after Tuesday's rally as investors cheered a better-than-expected report on existing-home sales. All three major indexes hit fresh 1 1/2-year highs.
Fitch cut its rating on Portugalby one notch to AA- and warned that another downgrade could be on the way.
The dollar ralliedagainst the euro after the downgrade, which sent commodities prices lower. Oil dropped to near $80 a barrel, while gold fell to a six-week lowbelow $1,090 an ounce.
Art Hogan, the chief market analyst at Jefferies, said he thinks today's move was all Portugal-dollar-commodities but that the prognosis for the market is good.
"I really feel like this market is on a path higher in the near term," Hogan said. "The first quarter is about to wrap up and there are virtually no preannouncements from Corporate America — that means earnings are are going to be much better," Hogan said.
"I think there's another 10 percent to the upside by year end," Hogan said.
In the day's economic news, new-home sales fell 2.2 percent to 308,000, the lowest on record, in February. Orders for durable goods, big-ticket items such as cars and refrigerators, rose 0.5 percentin February as inventories increased by the most since December 2008. And mortgage applications fell for a second straight weeklast week as interest rates crept higher.
Treasury prices extended lossesas investors soured on the latest round of debt auctions, greeting a sale of five-year notes with low demand. The $42 billion sale fetched a high yield of 2.605 percent, and the bid-to-cover ratio was 2.55.
Kansas City Fed President Hoenig, the lone dissenter in the last Fed meeting, said at a conference this morning that some form of the "Volcker rule," which limits large financial firms' speculative trading, should be includedin financial regulation.