Stocks sank Wednesday, dragging the S&P 500 index lower for a sixth straight day, as news from Europe fueled concern the debt crisis is worsening.
The Dow Jones industrial average closed down 235.26, or 2.05%, at 11,258.50; the S&P 500 fell 26.23, or 2.21%, ending at 1,161.81; and the Nasdaq composite closed down 61.20, or 2.43%, at 2,460.08.
Concern that the European debt crisis will weigh on the global economic recovery was amplified by data showing European services and manufacturing output shrank for a third month. In the U.S., durable goods orders fell and jobless claims topped forecasts.
The S&P 500 extended its November tumble to almost 7 percent and is trading about 10 percent below 1,293, the average year-end forecast of Wall Street strategists.
The Federal Reserve told the 31 largest U.S. banks to test loan portfolios and trading books against a recession and a European market shock to ensure they have enough capital to withstand losses. The most severe test scenarios include a jobless rate of 13%, an 8% drop in GDP and a 21% plunge in home prices.
Reports on Wednesday showed durable goods orders fell 0.7% last month, less than forecast, after a 1.5% drop in September that was more than twice as large as first reported. Consumer spending rose less than forecast in October, increasing 0.1%, while the 0.4% gain in personal income topped the median economist estimate. Initial jobless claims totaled 393,000, more than the 390,000 average estimate.
Treasuries erased losses after the U.S. sold $29 billion of seven-year securities at a record low yield of 1.415%, wrapping up $99 billion of note sales this week. Ten-year yields fell two basis points to 1.9% after climbing as much as four points earlier. The rate is up from a record low of 1.67% on Sept. 23.
Germany's 10-year bond yield surged 23 basis points to 2.15%, the highest in almost a month. The government failed to get sufficient bids at an auction of benchmark 10-year bunds Wednesday to reach its maximum sales target of €6 billion ($8.1 billion).
Italian 10-year bond yields rose 15 basis points to 6.97% even as the European Central Bank bought the nation's debt, according to three people with knowledge of the transactions, who declined to be identified because the trades are confidential. A spokesman for the ECB in Frankfurt declined to comment.
