Stocks declined Wednesday as a fall in commodity prices sparked a selloff in the energy and materials sectors and as a falling euro and high Italian bond yields kept Europe's debt crisis in focus.
Eight of 10 S&P 500 sectors were down, with energy <.GSPE> leading the way. The S&P 500 <.SPX> fell below its 50-day moving average, which may be a portent of more losses.
Italy's borrowing costs rose to a record after an auction of five-year debt, while the euro fell to an 11-month low against the dollar.
U.S. stocks have been weighed down this week in part on fears that an agreement at last week's European Union summit did not go far enough to resolve the two-year-old debt crisis.
The main issue right now is the complete, absolute failure of the European Union to come to any kind of solution. They're back to where they started from, said Jeffrey Sica, president and chief investment officer at SICA Wealth Management in Morristown, New Jersey.
Borrowing costs are going to rise and that's going to continue to put pressure on us. The summits they've had have taken us nowhere, and soon we're going to pay the price.
The Dow Jones industrial average <.DJI> was down 102.70 points, or 0.86 percent, at 11,852.24. The Standard & Poor's 500 Index <.SPX> took off 10.52 points, or 0.86 percent, at 1,215.21. The Nasdaq Composite Index <.IXIC> slid 39.64 points, or 1.54 percent, at 2,539.63.
The S&P energy sector <.GSPE> fell 2.5 percent as U.S. crude oil prices slid 4.2 percent to hover near $96 a barrel.
Gold dropped to its lowest level since early October as the weak euro and a shortage of dollar funding near the year-end prompted investors to sell aggressively. Commodity-related shares were further pressured by a strengthening U.S. dollar.
Investors were also disappointed the U.S. Federal Reserve made no mention of possible new stimulus measures after its Tuesday meeting.
Though a majority of economists polled by Reuters expected no more Fed action to boost the economy in the short term, another survey showed most primary dealers saw the central bank enacting some type of stimulus.
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An index of home builder stocks <.DJUSHB> dropped 2.4 percent after the National Association of Realtors said data on sales of previously owned homes will be revised downward because of double counting.
(Reporting by Angela Moon; additional reporting by Ryan Vlastelica)