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.