NEW YORK – U.S stocks skidded Wednesday, a looming election in Greece and the broader debt maelstrom in Europe their ominous backdrop.
Major market indexes wavered for much of the day but fell sharply after the finance minister of Cyprus warned that his country may seek its own bailout this week, stoking the uneasy feeling that the crisis is far from over.
In a troubling sign, Spain's 10-year borrowing rate inched up to 6.71 percent from 6.67 percent. Other countries in Europe have had to seek bailouts when their borrowing rates hit 7 percent.
European leaders said over the weekend that they will lend up to $125 billion to Spain's banks, but that has not soothed markets. Investors want more details about the plan, including where the money would come from and how likely it is that Spain would pay it back.
Investors aren't even sure they can believe the announcements out of Europe, said Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J.
"(Spanish Prime Minister Mariano) Rajoy came out a few weeks ago and said Spain didn't need money, and then he needs 100 billion euro," Sica said. "There's not a level of trust where people could say, 'The people in charge of this crisis have it under control.'"
Moody's, the credit ratings agency, downgraded Spain's government debt three notches late Wednesday, placing it one level above junk status. It downgraded Cyprus's debt by two, pushing it deeper into junk rating.
Italy — which, like Cyprus, could be the next flashpoint in the debt crisis — had setbacks of its own. Its 10-year borrowing rate rose to 6.07 percent from 6.02 percent, and the interest rate on its one-year bonds also rose sharply.
Greece will hold elections Sunday, and voters may endorse a party that wants to cancel the terms of Greece's own bailout. That would almost certainly force Greece to leave the euro currency.
Greece's elections are especially hard to predict because rules there forbid polling in the two weeks before an election, said Jim McDonald, chief investment strategist at Northern Trust in Chicago.
So "in a void of real developments," McDonald said, investors are hard-pressed to figure out how to trade, which helps explain the market's whiplash-inducing changes this week.
The Dow Jones industrial average shed 77.42 points to end at 12,496.38 after another day of volatile trading. The Dow had been down as much as 120 points and up as much as 24 points. That followed a triple-digit gain on Tuesday and a triple-digit loss on Monday.
The Standard & Poor's 500 index fell 9.30 points to 1,314.88, and the Nasdaq composite index fell 24.46 points to 2,818.61.
Richard Ross, global technical strategist at Auerbach Grayson in New York, said he's still bullish on U.S. stocks. He thinks their decline throughout May, perhaps a necessary correction, means they're ready to charge ahead.
The market's inability to make up its mind this week, he said, is a result of investors trading on news headlines rather than examining the fundamentals of individual stocks.
"The sovereign debt crisis, the Greek elections, the Egyptian elections — if you are basing an investment strategy around these headlines, you will be paralyzed," Ross said.
The interest rate on the U.S. 10-year Treasury note fell to 1.60 from 1.66 percent. Investors moved money into one of the few places where they think it will be safe, with the U.S. government.
Big movers included JPMorgan Chase, which rose 53 cents to $34.30 after CEO Jamie Dimon testified to Congress about the bank's surprise $2 billion trading loss. Dell jumped 30 cents to $12.28 after the computer maker said it would begin paying its first shareholder dividend. Cigarette maker Philip Morris International rose 69 cents to $85.70 after announcing it would buy back more of its own stock.
Scotts Miracle-Gro, which makes lawn-care products, fell $2.84 to $40.21 after issuing weak forecasts for profit and revenue. Cobalt International Energy fell $1.36 to $21.67 after announcing it will abandon a Gulf of Mexico well that hasn't yielded any commercial hydrocarbons. Nike fell $5.38 to $102.22.