Stocks shaved some of its losses in mid-afternoon trading Thursday, but worries about Greece and the financial reform continued to weigh on the market.
The Dow Jones Industrial Average was down about 50 points, after eking out a gain on Wednesday.
The S&P 500 and the Nasdaq were also lower lower. The CBOE volatility index, widely considered the best gauge of fear in the market, climbed above 29.
Despite recent market pullbacks, some market pros are still optimistic about the economy.
“Even though I think we’re going to be sideways for a while, longer-term, the underpinnings of the U.S. economy still look pretty good and we’re going to get through this European crisis as well,” Rob Morgan, chief investment strategist at Fulcrum Securities told CNBC.
JPMorgan was one of the biggest drags on the Dow, while Kraft and Boeing were among the handful of gainers.
Financials overall were one of the day's worst performers as worries about the financial-reform billand another earnings downgrade weighed on the sector.
Rochdale analyst Dick Bove lowered his projectionfor Goldman Sachs earnings to $1.93 a share from his prior estimate of $2.93 a share, citing a variety of factors, including a slowdown in the economy and a hefty charge for a one-time bonus tax in London. Not only is the estimate a full dollar below his prior estimate, but it's less than half that of the mean estimate of $4.10 a share.
Retail stocks also took a hit, with JC Penney and Macy's down almost 5 percent, as investors worried about the economic recovery.
Meanwhile, the Federal Reserve said it will offer $2 billion in 28-day term deposits starting Monday, in an attempt to drain excess reserves from the financial system. This comes a day after the Fed acknowledged in its statement that the European debt crisis will take a toll on the U.S. economy.
Today's economic news was slightly encouraging: Jobless claims dropped by 19,000last weekto 457,000, much better than the 7,000 drop expected. And orders for durable goods, long-lasting items like cars and appliances, fell for the first time in six months but the 1.1-percent drop was less than expected.
Treasurys extended gains after a solid auction of seven-year notes. The $30 billion sale fetched a high yield of 2.575 percent and the bid-to-cover ratio was 3.01.
Oil prices traded near $76 a barrel, while gold rose above $1,240 an ounce. The dollar gained against the euro.
Concerns over Greece weighed on the market as the nation's credit-default swaps, the cost of protecting it against default on its debt, hit a record high.