USA Today Stocks finish steeply lower; Greece spurs selling

NEW YORK (MarketWatch) — U.S. stocks on Wednesday took their harshest beating in two weeks on a toxic combination of concern about Europe’s debt crisis and data illustrating a slower U.S. economy.

“All the macro issues are banging the market around because we’re in the corporate news void,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

More than erasing Tuesday’s 123.14-point gain, its biggest daily jump since May 31, the Dow Jones Industrial Average DJIA -1.48%   on Wednesday closed at 11,897.27, down 178.84 points, or 1.5%. It had fallen just over 200 points during the session.

All 30 of the blue-chip index’s components lost ground, led by aluminum producer Alcoa Inc. AA +0.33%   and Bank of America Corp. BAC -0.29%  , both down nearly 3%.

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Manufacturing numbers disappoint

WSJ's Steve Russolillo has the latest manufacturing data and consumer price figures.

The Standard & Poor’s 500 Index SPX -1.74%   dropped 22.45 points, or 1.7%, to 1,265.42, with natural-resource companies hit the hardest among its 10 industry groups.

The Nasdaq Composite Index COMP -1.76%   declined 47.26 points, or 1.8%, to 2,631.46.

“There are legitimate fears about Greece. It’s not unsolvable but it needs more imagination than European leaders are showing now,” said David Kelly, chief market strategist at J.P. Morgan Funds.

Other strategists pointed to U.S. economic reports as the primary culprit for equities’ decline, saying investors were concerned that the trend of bearish data would continue, denting corporate earnings.

“We’re in the midst of this mushy economic data that is not likely to turn around anytime soon,” said Luschini at Janney Montgomery Scott.

“Don’t try to blame the Greek situation, it’s the economy,” said Elliot Spar, a market strategist at Stifel Nicolaus.

For every stock gaining more than five fell on the New York Stock Exchange, where volume neared 1.1 billion. Composite volume topped 4.2 billion.

Crude’s slide

On the New York Mercantile Exchange, crude oil fell under $95 a barrel for the first time since February, with the contract for July delivery sliding $4.56 to close at $94.81 a barrel.

A gauge of manufacturing in the New York region contracted, catching analysts off guard, while the government’s consumer-price index climbed 0.2%. Excluding food and energy costs, the index rose 0.3%, the biggest hike since July 2008. Read more about U.S. consumer prices and manufacturing activity in the New York region.

“We knew manufacturing is going through a correction now, but inventories are tight as a drum and eventually will pick up, and we knew the housing industry is suffering,” said Kelly at J.P. Morgan Funds.

But Spar at Stifel Nicolaus noted some are taking the New York manufacturing survey and extrapolating it to one from the Philadelphia region slated for release on Thursday.

“Then there is the weekly claims and housing starts that the market has to deal with,” Spar said of other U.S. economic reports to be released on Thursday.

Wednesday’s data included one that had U.S. industrial production undershooting estimates with a 0.1% rise in May, while an already-weak index of builder confidence for new single-family homes declined 3 points in June to 13, the lowest level since September 2010. Read more about industrial production and the home-builder index.

Trends point down

Ahead of Wall Street’s start, stock-index futures slid. That echoed moves in European equities as finance ministers meeting in Brussels failed to reach agreement on Greece’s financial crisis.

Greece’s opposition party reportedly asked Prime Minister George Papandreou to resign amid a 24-hour general strike to protest new austerity measures.

A spike this week in the put-to-call ratio from the Chicago Board Options Exchange proved to be a “short-term buy notice, with a big jump the next day, but with the overall trend lower, at least for a while,” said Randy Frederick, director of trading and derivatives at Charles Schwab & Co.

Based on charts built out of composite data from the options and futures markets, historical trends point to the third year as being the weakest in bull markets, which typically run four to five years, Frederick said.