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Stocks End Sharply Lower Amid EU Worries

Thursday, 17 Nov 2011 | 4:37 PM ET

Stocks eased off their worst levels, but still finished lower in another thin, volatile session Thursday as investors sifted through a handful of headlines from the euro zone and after the S&P breached a key technical level.

The Dow Jones Industrial Average fell 134.86 points, or 1.13 percent, to end at 11,770.73.

Most Dow components closed lower, led by Alcoa and JPMorgan .

The S&P 500 dropped 20.76 points, or 1.68 percent, to finish at 1216.15, breaking below a key technical level of 1,225. The Nasdaq declined 51.62 points, or 1.96 percent, to close at 2,587.99.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 34.

All 10 S&P sectors finished firmly in the red, led by energy and materials.

“This [selloff] seems to be much more technical,” said Kenny Polcari, managing director of ICAP Equities. “The S&P tested the 1,225 level and they couldn’t hold, so we broke through…1,200 is the next level, which is the 50-day moving average.”

The euro zone and IMF officials have discussed the idea of the ECB lending to the IMF, to provide the fund with sufficient resources for bailing out even the biggest euro zone sovereigns, according to officials.

"Some discussions on this have taken place...It could be one way of getting around the legal restrictions on the ECB," one official with knowledge of the talks said.

Meanwhile, Hungary said it would start talks with the IMF on a possible new deal, but the Fund said it had not received any requests for a new loan program.

Checking Market Pulse
Insight on the stock market declines Thursday, with Ed Keon, Quantitative Mgmt. Associates, and Tom Atteberry, First Pacific Advisors.

European markets hit a six-week closing low as rising sovereign bond yields intensified investors’ concerns. Yields in an auction of 10-year Spanish bonds rose to a record high sincethe country joined the euro zone and a French bond auction also saw high yields.

“Equity markets are still trying to look at earnings and fundamentals and that is giving upward pressure while the debt capital markets are still focusing on the debt reality situation in Europe so you’ve got two bipolar situations going on and that’s causing this gyrating market all week,” said Lorne Baring, managing director of B Capital.

Boeing received its largest commercial airplane order ever after Indonesia's Lion Air ordered a total of 230 airplanes with a list price of $21.7 billion. But shares still finished lower, along with the broader market.

Google launched its online music storein partnership with three major record companies in a move to compete with Apple's iTunes store.

Kodak fell after reports the troubled photographic film company is selling its online photo-sharing business in an effort to raise money to fund its turnaround, according to the Wall Street Journal.

Among earnings, Dollar Tree eked out a gain after the discount store chain reported a better-than-expected profit thanks to Halloween sales.

Sears Holdings tumbled after the department store posted a quarterly loss that nearly doubledamid weak demand for gadgets. Meanwhile, S&P boosted its price target on the firm to $66 from $62.

Children's Place Retail Stores soared more than 15 percent after the children's clothing retailer posted results that topped expectations and raised its full-year earnings forecast. In addition, at least two brokerages upgraded their ratings on the firm.

NetApp plunged after the data storage equipment maker reported a 6 percent dip in earnings as its costs rose faster than sales. At least three brokerages cut their price targets on the firm while another two lowered their ratings.

Clothing retailer Gap and chipmaker Marvell Tech are slated to post earnings after-the-bell tonight.

Yelp filed for an IPO of up to $100 million of class A common shares. The online review company has not picked an exchange to list its shares on yet, but plans to trade under the symbol "YELP."

On the economic front, weekly jobless claims fell to a seasonally adjusted 388,000 last week, hitting a seven-month low, according to the Labor Department.

Housing starts slipped less than expected in October, according to the Commerce Department. Meanwhile, the pace of factory activity in the U.S. Mid-Atlantic region fell in November, according to the Philadelphia Federal Reserve Bank. However, the details in the report were better-than-expected, with employment and the six-month outlook rising.

—Follow JeeYeon Park on Twitter: twitter.com/JeeYeonParkCNBC

On Tap This Week:

FRIDAY: Leading indicators; Earnings from Heinz

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