Stocks continued to slide Wednesday, after a selloff in the prior session, as Moody's put Portugal's debt rating on review.
The Dow opened down more than 60 points, after losing 225 points in the prior session in the market's worst selloff in months.
The CBOE volatility index, widely considered the best gauge of fear in the market, surged another 10 percent today, topping 26. The VIX ended last week around 22.
Alcoa , Intel and Bank of America led Dow decliners at the opening bell, while Coke and Walmart were among the early Dow gainers.
Moody's put Portugal's debt rating on reviewfor a possible downgrade by one or two notches, the ratings agency said in a statement.
This came after market buzz on Tuesday that Spain might be next to need a bailout and escalating rioting in Greece over tough austerity measures.
European Union Commissioner Olli Rehn said there is no need to set up a bailout plan for Spain. But ECB Governing Council Member Axel Weber said there is a serious threat of Greece's problems spilling over to other parts of the euro zone.
Three people were killedin Greece after rioters set a building on fire, trapping the people inside.
"For the moment, the threat of default on the part of the Greek government has been lifted, with the operative words here being 'for the moment,'" said Dennis Gartman, an independent trader. "More problems exist, and we should have every doubt — a lesson drawn from history —that Greece shall ... be able to abide by newly imposed austerity measures."
A couple of U.S. employment reports showed more jobs added and fewer layoffs but both still disappointed the market.
An ADP report showed the economy added 32,000 jobsin April, while outplacement firm Challenger, Gray & Christmas said planned layoffs dropped to a four-year low.
On the housing front, mortgage applications rose to a seven-month high.
And the ISM services index held steady at 55.4 in April from March. Economists had expected the gauge to tick up to 56. Still, the index remained above 50, which indicates growth.
The dollar continued to riseagainst the euro amid the European debt worries. Oil fell below $80 a barreland gold dropped to around $1,160 an ounce.
Former Bear Stearns CEOs James Cayne and Alan Schwartz will testify before the Financial Crisis Inquiry Commission later Wednesday on the collapse of the firm and its role in the financial crisis.
Time Warner beat earnings expectations this morning, reporting that ad revenue grewduring the quarter.
This came after News Corp. blew past earnings expectations due in large part to the success of "Avatar," while Viacommissed its revenue target.
Investors, though, remained divided on whether recent falls in the stock market signaled the start of a longer-term selloff or just a brief setback.
The correction has already started, Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, told CNBC Wednesday.
But Tobias Levkovich, chief U.S. equity strategist at Citi, told CNBC that the correction won't start until June or July.
Intel unveils a new version of its Atom chip, featuring more efficient power consumption and cheaper cost. Nokia and Microsoft unveil their first software collaboration aimed at cutting into the market share enjoyed by Research-In-Motion's BlackBerry. This comes as Verizon Wireless begins selling Microsoft's "Kin" smartphone Wednesday.
Still to Come:
WEDNESDAY: Jimmy Cayne testifies at FCIC hearing; Fed's Rosengren speaks; ISM services index; weekly crude inventories; earnings from Anheuser-Busch, Qwest, Time Warner, Garmin, CBS and Symantec
THURSDAY: Chain-store sales; ECB announcement; weekly jobless claims; productivity; Bernanke speaks; earnings from Activision, Kraft
FRIDAY: Goldman Sachs shareholders meeting; April jobs report; Fed's Plosser speaks; consumer credit; earnings from Liberty Media
More From CNBC.com: