Fear of European debt is once again playing havoc with Wall Street.
Stocks and commodities pitched down Wednesday in the United States as borrowing rates climbed for Spain and Italy, a sign that investors are losing confidence in those countries' finances.
Spain's 10-year borrowing rate leapt to 6.06 percent from 5.70 percent early Tuesday. Many fear that Spain, strangled by high unemployment and a real estate collapse, could be the next nation to require financial rescue.
The Dow Jones industrial average was down as much as 184 points and is on the verge of its longest losing streak since last summer.
The Dow climbed 25 percent from Oct. 3 through May 1 as the situation in Europe appeared to calm down. Last fall, nations that use the euro agreed to enforce budget discipline across the region.
The Dow closed at a four-year high on May 1. Since then worries about Europe have resurfaced. This round of jitters was set off by elections Sunday in which voters in Greece and France ousted leaders who had imposed tough spending cuts to soothe investors.
The spring decline has become a familiar on Wall Street. In 2010 and 2011, the Dow climbed in the first three months of the year, then flat-lined or lost ground as events overseas overshadowed modest economic growth in the U.S.
The market may be rocky today, but it is tame compared with last summer, when the Dow routinely swung by hundreds of points a day.
The atmosphere is starting to resemble last year's, though, as traders sell anything deemed risky based on the latest headlines from Europe.
On Wednesday, prices fell for commodities such as energy, copper and silver that are needed to sustain broad economic growth but are less valuable when the economy is weaker and demand wanes.
Benchmark crude oil, which sold for about $110 per barrel earlier this year, fell below $100 last week and kept sliding. It dropped 1 percent and traded around $96 on Wednesday on the New York Mercantile Exchange.
Bank stocks, which often take a hit because of fear about Europe, and industrial companies, which depend on a healthy global economy, had the steepest declines among U.S. industry groups.
European stocks are having one of their worst weeks in months. London's FTSE 100 index is down 2.2 percent this week, its worst performance since December. Stocks in Athens are down 10.8 percent, the most since August.
Cash flowed into ultra-safe investments such as U.S. Treasurys, pushing the yield on the 10-year note as low as 1.80 percent, a seven-month low.
One reason that demand for Treasurys is increasing: As Europe deteriorates and hiring in the U.S. slows, traders believe that the Federal Reserve is more likely to engage in another round of bond-buying to juice the economy.
Bond-buying by the Fed lowers bond yields, pushing more cash into stocks and commodities. When traders expect the Fed to act, they buy bonds to take advantage of the extra demand that the Fed's buying will create.
Economic indicators and corporate earnings in the U.S. continue to signal recovery, albeit a choppy one. The government said after trading began that U.S. wholesale stockpiles grew in March at their slowest pace in four months, a sign demand is too weak for companies to ramp up production.
After hitting a daily low in the first hour of trading, the Dow bounced back to a more modest loss. It was down 86 points at 12,846 shortly after noon EDT. The Standard & Poor's 500 index fell eight to 1,356. The Nasdaq composite index dropped 11 to 2,935.
European stocks also rose into the close, recovering some earlier losses. Indexes in France and London closed down less than 1 percent after steep losses earlier.
Daniel Wagner can be reached at www.twitter.com/wagnerreports .