Stocks were under pressure Wednesday, extending the previous day's sharp losses, as oil briefly crossed the $100 mark and investors remained jittery over the political unrest in Libya.
The Dow Jones Industrial Average tumbled almost 90 points, largely weighed by losses from Hewlett-Packard . The blue-chip index plunged almost 180 points in the previous session—its biggest point and percent drop since Nov. 16.
General Electric and Intel were also lower on the Dow, while Chevron and ExxonMobil gained.
The S&P 500 was lower and the tech-heavy Nasdaq dipped almost 1 percent after both indices fell more than 2 percent in the previous session.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped another 9 percent to rise above 22, after soaring almost 30 percent in the previous session—its largest one-day gain since May.
Among the key S&P 500 sectors, industrials, techs and consumer discretionarieslagged while energy and utilities were higher.
Oil prices briefly crossed the critical $100 mark, the first such move since October 2008, as escalating violence in Libya shook crude markets and extended supply worries. Gold prices soared above $1,410 an ounce.
Major oil giants were trading higher across the board including Petrobras and ConocoPhillips .
In addition to the turmoil in the Middle East, Steven Roge, portfolio manager at RW Roge & Co. cautioned that markets are due for "another European scare."
“We think fair value on the S&P is 900 but the likely scenario is that the market is not going to drop drastically to [that level],” he told CNBC. “We think the fundamentals of economy will eventually catch up and the markets will trend sideways. But with a lot of volatility, worries over agricultural prices and worries about Greece coming back every six months, we’re due for another Europe scare.”
Meanwhile, David Katz, CIO of Matrix Asset Advisors said he still sees markets heading higher by year-end, despite the headline risks and volatility.
“Stocks are modestly undervalued now…We’re early in an economic cycle where stocks sell at 16 to 16.5 times earnings so we think there’s upside for the market and we think there are lots of areas in the market that represent very good opportunities,” he told CNBC.
Hewlett-Packard plunged for a second day after the IT firmtrimmed its 2011 revenue projectionsTuesday afternoon on weak consumer PC demand and a lackluster showing from its services arm. In addition, at least six brokerages cut their price targets on the tech giant.
Also on the tech front, Apple shareholders rejected demands that the company disclose a succession plan for ailing CEO Steve Jobs but approved a proposal it adopt majority votes for board directors.
Meanwhile, Apple sent an invitation to media to attend a "special event" on March 2, which sources have said is intended to showcase a new iPad with features including a camera.
And among the morning's earnings reports, Lowe's reported a profit that beat expectations. This comes after a day rival Home Depotreported an upbeat quarter, raised its sales and earnings forecasts and boosted its dividend. In addition, at least three brokerages raised their price targets on Home Depot.
Luxury homebuilder Toll Brothers
Car-rental company Hertz posted a better-than-expected profit, helped by strong growth at its US off-airport business.
Among retailers, Saks reported a profit as it sold more items at full price, and the luxury department store chain said it expects higher sales at existing stores to continue this year. Meanwhile, TJX reported a 15 percent drop in earnings, dragged down by costs to close its A.J. Wright store division. The parent company of TJMaxx also plans to repurchase $1.2 billion of its stock this fiscal year and raise its dividend.
And Chico's shares jumped more than 8 percent after the women's clothing retailer forecast better 2011 gross margins and set an optimistic earnings goal,.
Notable after-the-bell reports include Priceline.com and Limited Brands .
Meanwhile, Nasdaq OMX is exploring options that include teaming up with a partner on a rival bidfor NYSE Euronext , according to a person familiar with the situation.
The alternatives include the possibility of tying up with IntercontinentalExchange or CME Group to wrest NYSE Euronext out of its deal with Deutsche Boerse, the person said.
On the economic front, home loan requests jumped 13.2 percent last weekas rates eased and encouraged refinancing, according to the Mortgage Banker's Association. Meanwhile, sales of previously owned U.S. homes rose unexpectedly in January, but prices fell to their lowest level in nearly nine years, according to the National Association of Realtors.
Homebuilders were lower across the board, including Pulte , D.R. Horton and Beazer .
Treasury prices pared gainsafter the government auctioned $35 billion of 5-year notes which had a high-yield of 2.19 percent and a bid-to-cover of 2.69.
Minutes to the Bank of England's latest meeting showed an increase in the number of Monetary Policy Committee members who voted in favor of a rate hike, raising expectations that the Bank of England will be among the first to raise interest rates.
Moreover, the report suggested that some of those opposed a rate hike this month would consider if it if the economy shows signs of picking up after an unexpected fall in output at the end of 2010.
On Tap This Week:
WEDNESDAY: Earnings after-the-bell from Limited Brands, Priceline.com, and Transocean.
THURSDAY: Durable goods orders, jobless claims, USDA agricultural trade outlook, new home sales, natural gas inventories, oil inventories, 7-year Treasury note auction, money supply; earnings before-the-bell from General Motors, Kohl's, Newmont Mining, Safeway, Sears and Target; earnings after-the-bell from AIG, First Solar, Gap and Salesforce.
FRIDAY: GDP (second reading), consumer sentiment; earnings before-the-bell from JCPenney.
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