Stocks finished near session lows in thin trading Wednesday as investors hesitated to stay long ahead of the Thanksgiving holiday amid ongoing concerns over debt issues in the U.S. and euro zone.
Markets and banks will be closed Thursday for the Thanksgiving holiday, while Friday will be a shortened trading session.
The Dow Jones Industrial Average plunged 236.17 points, or 2.05 percent, to finish at 11,257.55. Alcoa and BofA led the blue-chip decliners.
The S&P 500 dropped 26.25 points, or 2.21 percent, to end at 1,161.79. The Nasdaq fell 61.20 points, or 2.43 percent, to close at 2,460.08. The S&P and Nasdaq logged their sixth losing session and have fallen more than 7 and 8 percent in the last six sessions, respectively.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished above 33. This marks the Vix's 11th straight close above 30.
All 10 S&P sectors finished deeply in red, led by energy and financials.
“You’ve had decent earnings throughout the season and retail numbers were good, but the European crisis has trumped everything,” said Joe Bell, senior equity analyst at Schaeffer's Investment Research. “In the short-term, there’s low volume so you can get increased volatility…it could be a good time to buy volatility.”
Stocks were further pressured after EU Economic and Monetary Affairs Commissioner Olli Rehn said public finances are “deeply under stress” in the region.
European shares logged their worst close in seven weeksafter an auction of 10-year German Bunds was met with poor demand, possibly indicated German debt had lost its appeal.
Investors were also spooked by a report showing China's factory sector shrank the most in 32 months in November as new orders slumped, reviving worries China may be skidding towards an economic hard landing. German manufacturing also contracted for a second straight month in November.
“For the year-end, we still think expectations and sentiment are quite low so barring any bad news, there’s potential for some upside as earnings and consumers have shown strength on the domestic front,” added Bell. “If we can get above the 1,200 level on the S&P, that could be something that bulls can grab onto.”
Banks were lower after the Federal Reserve announced plans to stress test the six largest U.S. financialsagainst a hypothetical market shock, including a deterioration of the European debt crisis, as part of an annual review of bank health.
The six big banks to be tested are Bank of America , Citigroup , Goldman Sachs , JPMorgan , Morgan Stanley and Wells Fargo .
Among earnings, Deere jumped to lead the S&P gainers after the heavy equipment maker posted a 46 percent increase in earnings and projected "substantial growth" for 2012, thanks to strong global farming conditions.
Meanwhile Pandora Media results topped Wall street estimates, but shares tumbled after the online music streaming company handed in a conservative guidance.
Diamond Foods plunged almost 20 percent following a report that the death of a member of its audit committee was a suicide. The snack maker is in the midst of an internal accounting probe, but the firm says the death is unrelated to the investigation.
Airbus and Boeing are bidding to sell around 150 jets to United Continental as the world's largest airline joins an industry-wide scramble for fuel savings, people familiar with the matter said.
Treasury prices pared their lossesafter the government auctioned $29 billion in 7-year notes at high yield of 1.415 percent and bid-to-cover of 3.20.
On the economic front, consumer sentiment held upin late November, according to the Thomson Reuters/University of Michigan survey, but the figure was still slightly below estimates.
Durable goods orders, excluding transportation, unexpectedly fell in October, according to the Commerce Department.
Meanwhile, weekly jobless claims edged up 2,000 to a seasonally-adjusted 393,000, according to the Labor Department.
And weekly mortgage applications rebounded last week, but demand for refinancing slumped for a second straight week, according to the Mortgage Bankers Association.
Have a safe and happy Thanksgiving!!
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On Tap This Week:
THURSDAY: Thanksgiving Day: All US markets closed
FRIDAY: Black Friday, NYSE early close, Fed balance sheet, money supply, USDA food prices outlook
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