Selloff Smacks Stocks, Euro, Oil As Dollar Firms Up

Wall Street followed European markets south Wednesday, stumbling through a choppy session and briefly cutting their losses before diving back toward session lows.

Concerns over the eurozone�s ability to get a handle on a sovereign debt crisis that threatens the financial system and economic growth forecasts got a fresh airing, and Italian bond yields jumped early in the day.

The market made an effort to come off its worst levels after a Dow Jones Newswires report that quoted an unidentified French government official saying the country has not been warned by Standard & Poor�s that a downgrade of its AAA credit rating is forthcoming. That move was short-lived though, and with an hour left in the session the major averages were threatening to drop to the lows of the day.

The euro dipped back below the $1.30 mark to $1.2975, while the Dow Jones industrial average lost 163 points to 11,792. The S&P 500 was down 16 points to 1,210, and the Nasdaq 47 points to 2,533. There were not any winners in the commodity pits , as crude oil dropped $5.18 to $94.96 a barrel and gold fell out of bed, down $86.90 to $1,576.20 an ounce.

The safety trade was in full force, as the dollar rallied and U.S. Treasuries picked up steam even though the Federal Reserve and Chairman Ben Bernanke did not signal that another round of quantitative easing is imminent at their meeting Tuesday. The 10-year Treasury yield, which moves opposite its price, fell to 1.91%.

First Solar was among the day�s big losers, plunging 21.2% after cutting its 2011 forecast and offering weaker 2012 guidance than the Street anticipated.

Green Mountain Coffee Roasters fell 5.9% after a Stifel Nicolaus analyst warned of a decline in end consumer demand for the company�s Keurig coffee brewers and concerns about increased competition once certain patents expire in September 2012.

Caterpillar lost 4.7%, even though the Dow component said it expects 10-20% revenue growth next year, while General Electric managed to buck the broader trend for a slim 1.6% gain after the company signaled its intent to increase dividends in line with earnings growth at its Investor Day Tuesday.

Among the other stocks to show gains: airlines. Lower oil prices helped understand the 2% gains for the likes of Delta Air Lines and United Continental Holdings.