NEW YORK ? Stocks and the euro sank Wednesday as worries about Europe hang over financial markets. Energy companies fell hard as the price of crude oil plunged 4 percent. The dollar and Treasury prices rose as traders shifted money into lower-risk assets.
Italy's borrowing rates ratcheted higher and the euro slid below $1.30 for the first time since January, two signs that the debt crisis continues to pressure Europe's governments. The euro has now lost more than 3 percent in three days.
Italy had to pay higher borrowing rates in its last bond auction of the year Wednesday. The euro zone's third-largest economy paid 6.47 percent interest to borrow euro3 billion ($3.95 billion) for five years, up from 6.30 percent just a month ago. The higher rates make it more expensive for Italy to borrow money and reflect doubts that the country will be able to repay its debts.
The Dow Jones industrial average fell 111 points, or 0.9 percent, to 11,843 as of 2 p.m. Eastern time. Caterpillar Inc. fell 3.7 percent, the most of the 30 stocks in the Dow. The Dow is headed for its third day of losses in a row after closing at its lowest level in two weeks Tuesday.
The market appears to be in "sell now and ask questions later mode," said John Canally, investment strategist at LPL Financial. The fear that another bank failure will lead to a wider financial crisis like Lehman Brothers did in 2008 overshadows everything else, he said. Markets are so jittery now that traders see a slight drop in the euro or a small rise in Italian government bond yields a step toward a wider collapse.
The Standard & Poor's 500 index fell 10 points, or 0.9 percent, to 1,215. The Nasdaq fell 35, or 1.4 percent to 2,543.
The yield on the 10-year Treasury note sank to 1.92 percent from 1.96 percent late Tuesday as demand increased for ultrasafe assets. The dollar also rose against other currencies. The euro lost about a penny against the dollar to $1.29.
European markets were widely lower. Germany's DAX dropped 1.7 percent; France's main stock index lost 3.3 percent.
Energy stocks led the U.S. stock market lower after the price of crude oil plunged $4 to $96 a barrel. Apache Corp. and Cabot Oil & Gas Corp. both fell 4 percent.
Other commodities prices also dropped as investors shed assets seen as risky. Commodity prices also tend to fall when the dollar gains strength, since a stronger dollar makes it more expensive for investors using other currencies to buy commodities, which are priced in dollars. Gold and platinum sank 4 percent.
Health care, utilities and consumer staples companies ? all considered relatively resistant to economic downturns ? were little changed. Technology, materials and industrial companies dropped the most.
First Solar Inc. plunged 19 percent, the biggest drop in the S&P 500, after the country's largest solar company slashed its earnings estimate for the year. The solar industry has been hit hard by slower economic growth around the world and as government funding for alternative energy projects has dried up.
Avon jumped 6.7 percent, the largest gain in the S&P 500. The company announced late Tuesday that its CEO, Andrea Jung, will step down. The cosmetics company has been struggling with erratic financial results and is under scrutiny by regulators.
The Dow is now down 2.4 percent for the week, while S&P has lost 2.8 percent. The Nasdaq is down 3.6 percent.
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