Stocks closed broadly lower Wednesday as the dollar jumped following worries over the exacerbating Greek debt situation and after a handful of dismal economic news.
The Dow Jones Industrial Average plunged 178.84 points, or 1.48 percent, to close at 11,897.27. All 30 stocks finished lower, led by BofA, Alcoa and Home Depot .
The blue-chip index has declined almost 5.5 percent since the beginning of the month. Since 1950, the Dow has been down more than 5 percent halfway into a month 30 times. When that happened, the index almost always finished in the red for the month.
And if the Dow does finish down this month, it will be its first back-to-back monthly declines since May/June 2010.
The S&P 500 slumped 22.45 points, or 1.74 percent, to end at 1,265.42, while the Nasdaq fell 47.26 points, or 1.76 percent, to finish at 2,631.46.
All three major indices saw their biggest one-day drop since June 1. Materials, energy and financials led the sector laggards.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 17 percent to trade above 21—its highest level since mid-March.
"Stocks are likely to be lower at the end of the year than they are now," David Levy, director and chairman of the Jerome Levy Forecasting Center told CNBC, adding that stocks have not priced in the "true nature of the danger" from the European debt situation or the coming slowdown.
Stocks tumbled amid increased turmoil on the Greece's debt situation, after euro zone officials failed to forge a Greek aid deal. Thousands of rioters gathered in Athensto protest government cutbacks required to avoid a default. Euro zone ministers will meet again next week to try to find an agreement. (Read More: Why Greece Is Not the Next Lehman)
Greek Prime Minister George Papandreou said he will form a new government on Thursday and seek a vote of confidence from his parliamentary group.
Meanwhile, Moody's warned it may downgrade two Portuguese banks amid ongoing funding worries. Earlier today, the ratings agency cautioned France's top three banks, due to their exposure to Greece's debt crisis.
The euro skidded nearly 2 percent against the dollar, its worst daily drop since Aug. 2010, as traders turned to the greenback as a safe haven. Oil prices declinedafter a government data showed crude inventories fell. U.S. light, sweet crude slipped $4.56, or 4.59 percent, to settle at $94.81 a barrel, while London Brent crude slid $3.06, or 2.55 percent to settle at $117.10.
The dollar's gain put pressure on materials including BHP , Rio Tinto and Freeport McMoran .
Pandora ended higher, but pared back below its opening level of $20 a share after soaring almost 40 percent at its debut. Meanwhile, Maxim Group started coverage of the firm with a "buy" rating.
Volume in Pandora has also been heavyasover 35 million shares changed hands as of mid-afternoon—surpassing the 30.2 million shares LinkedIn saw during its entire first day of trading last month.
Banks were among the biggest losers with Citigroup and Wells Fargo slipping almost 3 percent each.
JPMorgan slumped after the bank agreed to pay $27 million to settle allegations that the firm's auto lending unit used high-pressure sales methods and false statements to sell products.
Among techs, chipmakers were hard hit with Intel , STMicroelectronics and Broadcom falling broadly.
Nokia dropped, giving back all its gains from Tuesday following news that the mobile phone maker had settled long-standing patent disputes with Apple.
NetApp was the among the only notable gainer on the tech front after Credit Suisse raised its rating on the firm to "outperform" from "neutral."
Pfizer sagged after U.S. and British researchers said a mist inhaler made by the pharma giant used by people with lung diseases increase their risk of dying by 52 percent.
Johnson & Johnson said it would quit development of its two struggling stents businesses. Meanwhile, rival Boston Scientific gained following the news. Brean Murray started coverage on the firm with a "hold" rating.
Carnival slipped after Nomura cut its price target on the cruise line leader.
Boeing announced it is planning to raise its production rate for the 737 aircraft to 42 jets per month in 2014.
Adding to the day's woes, a gauge of manufacturing in New York State showed the sector unexpectedly contracted in June, according to the New York Federal Reserve. Also, homebuilder sentiment saw a surprising decline to its lowest level since September 2010, according to the NAHB.
"We think it's time to start building positions in what we think may be a better 2012," Megan McGrath of MKM Partners told CNBC. "We'd stick to companies that are making money already, or who are very close to making money."
MKM just initiated coverage of the homebuilders with buy ratings on D.R. Horton, Pulte Homes, Toll Brothers and Lennar. The firm has a "neutral" rating on KBHome and Ryland and has a "sell" rating on Hovnanian.
In other economic news, consumer price index rose slightly in May, according to the Labor Department, while industrial output edged up a notch, according to the Federal Reserve.
And the Mortgage Bankers Association said refinancing requests pushed home loan applications to their highest level in three months.
European stocks closed loweramid renewed concerns over Greece's debt crisis and contagion fears.
On Tap This Week:
THURSDAY: Housing sales, jobless claims, current account, Philadelphia Fed survey, Fed's Fisher speaks, money supply; earnings from Kroger, Pier 1 Imports, Smithfield Foods, Research In Motion
FRIDAY: Consumer sentiment, leading indicators, quadruple witching
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