Stocks accelerated their losses in the final minutes of trading to close near session lows Thursday, pushing the S&P 500 below the key 1,400 level, a day ahead of the Fed's Jackson Hole meeting and following reports that Spain may delay its decision on seeking a bailout.
The Dow Jones Industrial Average tumbled 106.77 points, or 0.81 percent, to 13,000.71, led by Intel and Caterpillar . The blue-chip index dipped below the psychologically-important 13,000 level several times throughout the session.
The S&P 500 fell 11.01 points, or 0.78 percent, to close at 1,399.48, finishing below the 1,400 level for the first time since August 6. The Nasdaq dropped 32.48 points, or 1.05 percent, to end at 3,048.71.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped to close near 18.
All key S&P sectors ended lower, led by industrials and techs. All three major indexes are now lower for the week and the Dow is in negative territory for the month.
Stocks took another leg lower following a report that Spain will delay deciding whether to seek a sovereign bailout until the aid conditions are clear, according to Prime Minister Mariano Rajoy after a meeting with French President Francois Hollande.
Meanwhile, Slovakia's Prime Minister Robert Fico said there is a 50-percent chance of the currency bloc breaking up, ahead of a series of meetings of leaders next month.
“When you have such a thin market and volume’s so anemic, it doesn’t take much to push things around,” said Joe Saluzzi, co-manager of trading at Themis.
The euro erased its gainsto fall near session lows against the U.S. dollar. European shares also slumpedfollowing the report.
Investors were also cautious a day ahead of Chairman Ben Bernanke’s speech on Friday at the annual symposium in Jackson Hole, Wyoming.