U.S. stocks tumbled, joining a global stock selloff after a disappointing Spanish bond auction.
The Dow Jones Industrial Average slid 157 points, or 1.2%, to 13043, putting the blue-chip index on pace for a second straight decline. The Standard & Poor's 500-stock index shed 17 points, or 1.2%, to 1397, while the Nasdaq Composite lost 48 points, or 1.6%, to 3065.
Financial stocks led the markets lower, with Bank of America and J.P. Morgan Chase leading the declines. Companies with exposure to global growth were also weak, dragged lower by Alcoa and DuPont.
The losses came as investor grew more concerned about Spain's rising debt burden. An auction of Spanish government debt disappointed expectations, selling just 2.589 billion ($3.43 billion) worth of bonds, at the bottom of its planned range, and at yields that were well above previous auctions.
Following the auction, yields on 10-year Spanish government debt rose to 5.678%, from 5.445% Tuesday, the highest level since Jan. 9. Stocks fell sharply. Germany's DAX skidded 2.8%, while France's CAC-40 declined 2.5%.
Also weighing on European investor sentiment was a revised reading of euro-zone business activity in March, which confirmed contraction, as well as a decline in euro-zone retail sales in February.
Meanwhile, the European Central Bank left its main interest rate unchanged for the fourth straight month Wednesday, as expected.
Once the ECB decided to extend liquidity to European banks, "people thought that central banks could solve all of our problems and that we could forget all about Europe," said Jerry Webman, chief economist of OppenheimerFunds. "The weak Spanish auction today tells us that these risks in Europe are still there... The markets are right to be a bit cautious about how the European debt situation evolves."
Asian bourses were also broadly lower. Japan's Nikkei Stock Average slumped 2.3%, its biggest one-day drop since Nov. 1. South Korea's Kospi Composite shed 1.5%, while China's market remained closed for a holiday.
The U.S. market selloff has come after the minutes of the latest meeting of the Federal Reserve rate-setting committee, published Tuesday, showed little evidence that the central bank was moving towards further easing.
"A lot of us are scratching our heads, because if things are strong enough that we don't need stimulus, shouldn't we be optimistic, not pessimist? I think the U.S. economy can ride without training wheels, but clearly some market participants are afraid of that," said Mr. Webman.
In U.S. economic headlines Wednesday, 209,000 new private-sector jobs were added in March, roughly in line with expectations for an increase of 200,000 jobs. The private-sector jobs report is seen as a preview to the closely watched government employment report due on Friday. This week, that government report falls on Good Friday -- a day when the stock market will be closed but bond markets will be open for a half-day.
Separately, a reading on service sector activity in March came in a touch below expectations.
Crude-oil futures fell 1.8% to above $102 a barrel, while gold futures dropped about 3% to about $1,620 an ounce. Silver also tumbled, falling more than 5%. The U.S. dollar rose against the euro and lost ground against the yen. Treasurys rose, sending the yield on the benchmark 10-year note to 2.251%.
In corporate news, SanDisk was the worst-performing stock on the S&P 500 after the flash memory company indicated that fiscal first-quarter revenue outlook and total gross margin would fall short of previous projections because of weaker-than-expected pricing and demand.
Monsanto rose after beating analysts' quarterly estimates, highlighting strong sales in the U.S. and Latin America for the company's seeds as farmers look to continue supporting output as crop prices remain at quite-profitable levels.
Hovnanian tumbled after the home builder said it was selling 25 million shares of common stock to the public, and plans to use some of the proceeds to pay down debt.
General Electric declined after Moody's Investors Service lowered its credit rating on the blue chip conglomerate by one notch to Aa3, and on its financing arm by two notches to A1.
Williams Partners dropped after the company said it planned a public offering of nine million common units, representing limited-partner interests, to help fund its acquisition of Caiman Eastern Midstream.
Yahoo rose after it said it would lay off 2,000 workers and change its focus after years of flat revenue growth and declining use of some of its websites.
DDi rallied after the printed-circuit-board maker agreed to be acquired by ViaSystems Group for about $266.2 million in cash.
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