Dow falls 161 as European worries mount

Updated: 9:44 p.m. ET

U.S. stocks slumped today, giving up all of Tuesday's gains in the process, as investors around the world worried that Spain's banking system might implode and cause chaos across Europe.

The Spanish crisis caused the euro to fall to its lowest levels against the dollar since the summer of 2010. Greece was an issue on a new poll suggesting a June 17 parliamentary victory by leftists. Stocks across Europe were sharply lower, with markets in Spain, Greece and France especially hard hit.

Crude oil (-CL) in New York fell below $88 for the first time since October. Gold (-GC) dropped to its lowest levels since July 2011 and then rebounded. The yield on the U.S. 10-year Treasury note fell below 1.7%, its lowest level ever.

At the same time, investors were dismayed by a report showing pending home sales in April had fallen 5% from March. But the National Association of Realtors said pending sales -- where contracts have been signed but aren't closed -- were up 14.4% from a year ago. Homebuilding shares moved lower.

The Dow Jones industrials ($INDU) tumbled 161 points to 12,420; the blue chips had been down as many 173 points. Today's decline comes after the Dow had gained 126 points on Tuesday. The Standard & Poor's 500 Index ($INX) dropped 19 points to 1,313, and the Nasdaq Composite Index ($COMPX) fell 34 points to 2,837.

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The Nasdaq-100 Index ($NDX) was off 22 points to 2,537. Apple (AAPL) was up $6.90 to $579.17, adding 5 points to the index. CEO Tim Cook promised a host of new products in the fall at a Tuesday conference. One product that's widely talked about is an Apple television.

Facebook (FB) shares were off 65 cents to $28.19 after falling to as low as $27.86. The close was off 25.8% from its initial public offering price of $38.

Game-maker Zynga (ZNGA), whose fortunes are tied to Facebook, fell 22 cents to $5.87. Since May 17, the day the Facebook IPO was priced, Zynga shares have fallen 29%. They're off 60% since hitting a closing high of $14.69 on March 2.

After hours came the disclosure of a casualty of the Facebook IPO. Travel site Kayak looks to have halted its own IPO effort. A roadshow to pitch the company's stock that had been expected to start this week was halted, reports said.

Morgan Stanley, the lead bank on the Facebook deal, also is leading the Kayak deal. With Facebook proving a disappointment for many investors, timing for the Kayak deal is uncertain now, The Wall Street Journal said. The Journal said that the company is assessing investors' current appetite for Internet stock deals.

May has been a crummy month
If today's declines hold through Thursday, May shapes up as the worst month for stocks since at least September, with the Dow and S&P 500 down 5.9% and 6.2%, respectively. The Nasdaq, off 7.6%, is looking at its worst monthly performance since May 2010.

May 2012 offers another statistical oddity: It's the first month since May 2010 where the Dow did not rise for two days in a row.

The Dow is still up 1.7% for the year after falling 6.5% from its 2012 high on May 1. The S&P 500 is up 4.4% for year, with the Nasdaq up 8.9%.

Futures trading suggests a modestly lower open on Thursday.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil (-CL)			$87.82			$90.76			-16.26%			-11.14%
(per barrel)
Heating oil (-HO)			$2.7438			$2.8132			-13.83%			-5.85%
(per gallon)
Natural gas (-NG)			$2.4180			$2.4850			5.82%			-19.10%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.7739			$2.8335			-11.22%			4.38%
(per gallon)
Brent crude			$103.47			$106.68			-13.44%			-3.64%
(per barrel)
Retail gasoline			$3.6260			$3.6360			-4.98%			10.68%
(per gallon; AAA)

Thursday and Friday bring big economic reports
Today's declines come just before two days filled with important economic reports.

Thursday's reports include an important revision to first-quarter gross domestic product, a snapshot of the economy's condition, and the weekly report on jobless claims. In addition, the  ADP National Employment Report, which will offer a look at private-sector employment trends in May, comes out, along with the Challeger, Gray and Christmas report on layoffs in May.

And then there's the report from the Chicago Purchasing Managers on business conditions in May. It's widely considered a good barometer on the economy.

On Friday, the Labor Department reports on nonfarm payroll employment and unemployment. Automakers report May sales, and the Institute for Supply Management issues its May report on manufacturing.

At the same time, Germany will report on unemployment for April. And there will be reports on manufacturing from Germany, Britain and the European Union on Friday.

The euro and oil fall; gold rallies
The euro fell to $1.23962 at 1:35 p.m. ET, its lowest level since June 30, 2010. The U.S. Dollar Index, which measures the greenback against a basket of currencies, settled at 83.086, up from Tuesday's 82.581. It was the highest level for the index since October 2010.

Crude oil settled down $2.94 to $87.82 a barrel. Brent crude fell $3.21 to $103.47 a barrel. The average U.S. price for unleaded gasoline was $3.626 a gallon, down from $3.636 a gallon on Tuesday, according to AAA's Daily Fuel Gauge Report.

Gold settled up $14.70 to $1,563.40 an ounce, after dropping to as low as $1,530.40. Silver (-SI) was up 19.2 cents to $27.983 an ounce. Copper (-HG) was down 7.2 cents to $3.39 a pound.

Interest rates were lower, with the 10-year Treasury yield falling to 1.625% from 1.731% on Monday. The yield hit as low as 1.619%. According to Reuters, that was the lowest yield in at least 60 years.

A run on Spanish banks?
The market's decline came on a report that deposits in Spain's banks are shrinking. Retail and corporate deposits in Spanish banks fell €31.44 billion ($39.31 billion) to €1.624 trillion, their lowest since the eurozone debt crisis began, according to data published by the European Central Bank.

Spanish banks are especially vulnerable because of the country's deep recession -- its second in three years. The recession has pushed its unemployment rate to 24.4%.

At the same time, the European Commission said the eurozone risks "financial disintegration" and should use its new bailout fund to recapitalize distressed banks directly while embarking on a transnational banking union.

The worries pushed Spain's Ibex 35 Index ($ES:IB) down 2.6%. France's CAC-40 Index ($FR:PX1) fell 2.2%. Germany's Dax Index ($DE:DAX) was off 1.8%. Britain's FTSE-100 Index ($GB:UKX) fell 1.8%.

Meanwhile, the latest poll suggests that the leftist Syriza party in Greece was leading the pro-bailout conservatives ahead of a parliamentary election June 17 that could determine if the nation remains in the euro zone.

Polls taken over the weekend had shown the conservative New Democracy Party leading.

Has housing lost its momentum?
The pending-home sales report was a disappointment; most people who watch housing had expected a gain and confirmation that a housing recovery is taking hold.

But pending sales in April fell after three months of gains. While April's index level of 95.5 was off from March, it was still up 14% from a year ago.

Nonetheless, housing shares fell. Lennar (LEN) was the second-worst-perform​ing S&P 500 stock, down $1.93 to $26.82.

A lot of red in U.S. stocks
It was hard to find stocks in the black today.

Chip-giant Intel (INTC), up 4 cents to $26.13, was alone among the 30 Dow stocks in showing a gain today. For several hours, Wal-Mart Stores (WMT) was alone in the black, but the shares fell back to a loss of 24 cents at $65.44.

Only 28 S&P 500 stocks were showing gains, led by Monsanto (MON) and Whirlpool (WHR).  Meanwhile, just 15 Nasdaq-100 stocks were higher, led by Vertex Pharmaceuticals (VRTX) and Apple.

All 10 sectors of the S&P 500 were lower. The hardest-hit sector was energy. The Energy Select Sector SPDR (XLE) exchange-traded fund was down $2.03 to $64.19. Exxon Mobil (XOM) and Chevron (CVX) were off $2.14 to $79.79 and $2.61 to $97.63, respectively.

Banks were weak. JPMorgan Chase (JPM) dropped 67 cents to $32.96.

If you wanted big losers, look no further than Sears Holdings (SHLD), down $5.16 to $52.34.

Research In Motion (RIMM) dropped 88 cents to $10.35. Late Tuesday, the maker of the BlackBerry device said it has hired JPMorgan Securities and RBC Capital to advise on its strategic options. Which means basically whether to put the company up for sale. It also sees an operating loss for its first-fiscal quarter.

And lastly, we note Pep Boys-Manny Moe & Jack (PBY). Shares of the auto-parts company were down $2.20 to $8.89. Reason: An $804 million buyout of the company collapsed. Would-be buyer Gores Group canceled the deal after Pep Boys' profits began to shrink. Gores Group will pay Pep Boys a breakup fee.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0700%			0.080%			-22.22%			600.00%
5-year Treasury note			0.690%			0.764%			-14.92%			-16.87%
10-year Treasury note			1.625%			1.731%			-15.14%			-13.15%
30-year Treasury bond			2.718%			2.842%			-12.58%			-5.92%
Currencies
U.S. Dollar Index			83.086			82.581			5.37%			3.18%
British pound			1.5494			1.5642			-4.60%			-0.28%
(in U.S. $)
U.S. $ in pounds			£0.645			£0.639			4.82%			0.28%
Euro in dollars			$1.24			$1.25			-6.54%			-4.44%
(in U.S. $)
U.S. $ in euros			€ 0.808			€ 0.801			6.99%			4.65%
U.S. $ in yen			79.24			79.54			-0.95%			2.77%
U.S. $ in Chinese			6.38			6.34			1.25%			0.85%
yuan
Canada dollar			$0.972			$0.978			-4.09%			-0.93%
(in U.S. $)
U.S. dollar			$1.030			$1.023			4.26%			0.94%
(in Canadian $)
Commodities
Gold (-GC)			$1,563.40			$1,548.70			-6.06%			-0.22%
(per troy ounce)
Copper (-HG)			$3.390			$3.462			-11.48%			-1.34%
(per pound)
Silver (-SI)			$27.9830			$27.7910			-9.78%			0.24%
(per troy ounce)
Wheat (-ZW)			$6.5375			$6.5675			-0.11%			0.15%
(per bushel)
Corn (-ZC)			$5.5950			$5.625			-11.79%			-13.46%
(per bushel)
Cotton			$0.7159			0.7271			-19.92%			-21.91%
(per pound)
Coffee			$1.6680			1.679			-7.10%			-27.37%
(per pound)
Crude oil (-CL)			$87.82			$90.76			-16.26%			-11.14%
(per barrel)