Stocks fell 1 percent on Wednesday after a hefty year-end rally, with the S&P 500 erasing its gains for the year as investors shifted focus to what many expect will be a difficult start to 2012.

The Dow Jones industrial average <.DJI> dropped 120.22 points, or 0.98 percent, to 12,171.13. The Standard & Poor's 500 Index <.SPX> dropped 13.91 points, or 1.10 percent, to 1,251.52. The Nasdaq Composite Index <.IXIC> dropped 29.37 points, or 1.12 percent, to 2,595.83.

(Reporting Edward Krudy; editing by Jeffrey Benkoe)

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