NEW YORK — Stocks slumped Wednesday in one of their worst showings this year as Greece, slogging through negotiations with other countries over a bailout, once again cast a long shadow over the financial markets.
The Dow Jones industrial average dropped 97.33 points to close at 12,780.95. It was the worst one-day decline for the Dow this year, and the index narrowly avoided its first triple-digit loss for the year. The average was down as much as 125 points.
The Standard & Poor's 500 and the Nasdaq composite index climbed tentatively through the morning but gave up their gains by afternoon. The S&P fell 7.27 points to 1,343.23. The Nasdaq fell 16 points to 2,915.83.
The declines were broad, with nine of the 10 industry groups in the S&P recording losses. The only group that didn't was materials, which was flat. Only five of the 30 stocks in the Dow rose for the day, and just barely.
In a 3½-hour conference call with the finance ministers of the other 16 countries that use the euro, Greece offered assurances that it had found €325 million in budget cuts in addition to harsh measures that it has already promised.
But in a sign of the distrust that has built during the European debt crisis, particularly among richer countries, a European official said Greece would need tighter oversight of its budget before it receives another bailout.
Greece needs the money before a big bond payment comes due March 20. A default would rattle the world financial system. For weeks, incremental movement in the Greek crisis has whipsawed U.S. stocks.
"Long story short, we long for the days when markets traded on fundamentals," said David Katz, principal at WeiserMazars Wealth Advisors. He thinks stock picks have been ruled by emotion, rather than clear-eyed examinations of companies' balance sheets, at least since the credit crunch in 2007 and the ensuing Great Recession.
"Just as quickly as you see the market pop up from one headline, then you see the downturn from another," Katz said. "It doesn't really have to be (big news). It's not even the meat of the story, it's the headline."
Greece makes up just 2 percent of the total economic output of the 17 countries that use the euro. But investors are troubled by the fallout from a potential default and similar financial problems festering in other European countries, like Portugal, Italy and Spain.
"There is no shortage of people who would argue that Greece is a non-event," said Dan McMahon, director of equity trading at Raymond James. "It's more that it's a barometer for the rest of the eurozone."
Stocks have risen steadily all year, so some analysts argued that a slowdown was inevitable. The S&P 500 ended 2011 at 1,258, and many analysts predicted it would end 2012 at 1,350. But it had already reached that level last week.
"When the market does in a few weeks what was expected for the year, it's natural for the market to sort of pause and pinch itself and say, 'Is this supposed to go on?'" said Brian Gendreau, market strategist for Cetera Financial Group.
"If it continued at the same pace for the rest of the year, that's just unrealistic. You'd need an unrelenting drumbeat of good news, and we haven't gotten that," Gendreau said.
The price of oil climbed to its highest level in five weeks after Iran said it would cut off some exports of crude to Europe. Iran was responding to the European Union's plans to embargo Iranian oil this summer, an attempt to pressure Iran to abandon its nuclear program. Benchmark U.S. crude rose $1.06 to end the day at $101.80 per barrel in New York.
The average retail price for a gallon of gas was $3.52. Gas prices are already the highest on record for this time of year, and economists fear that they could crimp the halting economic recovery. This time a year ago, gas was $3.12.
- What's in a name? At Grand Canyon, history,...
- Are you part of the global 'baby shortage'?
- Another study lists Salt Lake as one of the...
- Nintendo opens 2015 with some big announcements
- Lawmakers looking to pump up gas tax this...
- Faith leaders: your secret weapon in the...
- Kimberly Rotter: 7 weird things that affect...
- Randy Shumway: The winners and losers of...
- EPA inventory highlights 'toxic'... 19
- Analysis: Obama seizes on recovery,... 17
- Obama's proposed mandatory paid... 13
- Utah has fourth largest gender wage... 12
- Are you part of the global 'baby... 11
- Another study lists Salt Lake as one of... 10
- Survey ranks Utah's best and worst... 9
- Obama pitches his economic plan to... 6