Why US Stocks Are Dropping Now

Stocks have weakened middayon Greek concerns. It started with Italy — Moody's yesterday said it was considering downgrading the creditworthiness of Italian banks. There were rumors this morning that there may be additional stress tests on Italian banks and they may have to raise additional capital.

Several Italian banks were briefly halted as they were limit down.

On top of that, Spanish and Irish sovereign debtis continuing to weaken.

Not surprisingly, the euro has weakened against the dollar, which is typically negative for U.S. equities.

Big European banks like Lloyds , RBS , Barclays and ING are down 4 to 6 percent going into the European close at 11:30am ET.

The main Italian stock index, the FTSE MIB, is down 1.4 percent, right near the lows for the year.

The main Spanish stock index, the Ibex 35, is down 1.7 percent and at the lowest level since January.

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