Stocks finished near session lows in choppy trading Wednesday, with the Dow and S&P wiping out all of the previous session's gains led by financials, as investors continued to cautiously monitor developments in the European banks.
The Dow Jones Industrial Average tumbled 519.83 points, or 4.62 percent, to finish at 10,719.94, wiping out the previous session's 429-point rally. The blue-chip index has had triple-digit moves in four of the last five trading days.
The Dow has now lost over 2,000 points, or nearly 16 percent, in the last 14 trading sessions (or since the close on Jul. 21). It’s the Dow’s worst 14-day decline since March 2009.
Disney and BofA led the blue-chip decliners.
The S&P 500 lost 51.77 points, or 4.42 percent, to close at 1,120.76.
The Nasdaq dropped 101.47 points, or 4.09 percent, to end at 2,381.05.
Both the S&P and Nasdaq have shed almost 17 percent over the past 13 trading sessions (or since the close on Jul. 13), which is the worst 13-day drop since Mar. 2009 and Nov. 2008, respectively.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared more than 20 percent.
Volume was heavy again with the consolidated tape of the NYSE at 7.91 billion shares, while 2.14 billion shares changed hands on the floor.
“In the long run, [volatility] is something we’re going to have to get used to until we get two things answered: One is the once-and-for-all solution to the euro zone debt crisis and the other is political consensus in Washington,” Art Hogan, managing director of Lazard Capital Markets told CNBC.
On Tuesday, stocks surged to see its biggest one-day gain since May 2010in wild day of trading even after the Federal Reserve's statement promising to hold interest rates at their current low level for the next two yearsdid little to alleviate fears over the economy.
According to a Reuters poll, economists saw odds of around one-in-three that the U.S. will slip back into recession, heightening expectations the Fed will launch another round of monetary easing.
Goldman Sachs also reviewed its position on monetary stimulus, saying there is a chance that the Fed will resume quantitative easing later this year or in early 2012.