NEW YORK (
) -- Stocks were sinking near session lows as a failed German bond auction heightened debt contagion fears and pushed the euro to its lowest level against the dollar in more than a month.
Dow Jones Industrial Average
was down 190 points, or 1.7%, at 11,303. The index has now fallen in four of the past five sessions, losing 5% over that span and is in negative territory for 2011. All 30 Dow components were in negative territory with
Bank of America
JP Morgan Chase
leading the losses.
was down 21 points, or 1.7%, at 1168. The
was down 49 points, or 1.9%, at 2473.
An unsuccessful attempt to sell German government bonds suggested that investors are demanding ever higher compensation for taking on risk in the eurozone. The government only sold €3.5 billion of the €6 billion in 10-year bonds earlier Wednesday. German sovereign debt is considered the safest haven relative to other bond markets in the eurozone. Lower yields in Germany indicate that the contagion may be spreading to the heart of Europe.
Nervousness stemming from the auction overshadowed Tuesday's news that the International Monetary Fund will provide eurozone countries a lifeline of sorts. Investors are looking skeptically at the IMF's latest plan to provide credit lines based on how much a country already puts into the IMF.
"There have been a lot of headlines about what could help Europe so investors are taking a believe-it-when-we-see-it attitude," said Brian Lazorishak, portfolio manager with Chase Investment Counsel. "The low volume day may add to the volatility. It doesn't take much to move the market around."
The European Central Bank's move Wednesday to buy Italian and Spanish bonds provided little relief for the region's government debt market. Ten-year bonds in Italy were rising 2.2% and nearing the dangerous 7% threshold again. Yields on Spain's 10-year benchmark were up 0.6% at 6.65%.
The euro was plunging 1.18% to $1.34, a six-week low against the dollar. The greenback was up 1.1% compared to a basket of currencies. In the bond market, 10-year Treasuries were off 3/32, pushing the yield to 1.93%.
London's FTSE slipped 1.3%. Germany's DAX gave up earlier gains, closing down 1.4%. Manufacturing in China may shrink by the most since March 2009, according to a preliminary purchasing manager's index for November. Overnight, Asian stocks fell following losses in the U.S. Hong Kong's Hang Seng fell 2.1%.
U.S. economic data failed Wednesday to lift market sentiment.
"U.S. economic numbers continue to be consistent with slow growth at best," said Lazorishak. "Today's numbers were more or less as expected; not great, but not horrible."
Weekly jobless claims rose 2,000 to 393,000, slightly higher than expected. Economists forecast claims to edge up to 390,000 after 388,000 in the prior week.
Durable goods orders fell 0.7%, better than the forecast of a 1.5% drop. However, as David Ader, strategist with CRT Capital Group noted, "With downward revisions and the core measures weaker than expected ... we chalk this up to a soft figure."
Personal income, up 0.4% in October, was better than the 0.3% gain forecast, while spending, up 0.1%, was down from the expected 0.3% rise.
Consumer sentiment climbed to its highest level in five months, according to the University of Michigan's consumer sentiment index. The final read for November rose to 64.1, slightly lower than the expected 64.5. The index came in at 60.9 in October.
A surprise cut in the government's estimate for economic growth in the third quarter pressured stocks on Tuesday. Even with the
still suggesting that monetary easing could be in the books, as well as a help for Europe crisis from the IMF, the Dow was off 0.5% Tuesday.
On Wednesday, the January crude oil contract was slipping $1.82 to trade at $96.19 a barrel. Gold for December delivery was down $11 to trade at $1691 an ounce.
In corporate news,
was up 3.5% after its earnings beat estimates. The farming equipment maker posted fourth-quarter earnings of $1.62 a share on revenue of $8.61 billion, up from analysts' expectations of $1.43 a share on revenue of $7.87 billion.
fell 8% even though its third-quarter revenue rose 99% to $75 million, beating estimates for $71 million. For the current quarter ending in January,
forecast an adjusted loss of 2 cents to 4 cents a share on revenue of $80 million to $84 million, compared to expectations for a loss of 2 cents a share on revenue of $82.3 million.
slipped 1.1%. The drug company will pay $950 million to resolve government allegations in the marketing of its painkiller Vioxx, the Justice Department said. Merck also will plead guilty to a misdemeanor charge.
was up 5.4%. The television recording product maker
and delivered its first increase in total subscriptions in four years.
-- Written by Chao Deng in New York