Market Recap: Same Old, EU Crisis Brings Down Markets

Markets closed down today:

▼ Dow: -0.63 percent

▼ Nasdaq: -0.37 percent

▼ S&P: -0.41 percent

Precious metals:

▼ Gold: down -0.60 percent to $1,640.42 an ounce

▼ Silver: down -0.52 percent to settle at $31.59 an ounce

Commodities:

▼ Oil: -1.49 percent

Markets closed down because:

It hardly needed it, but the U.S. stock market on Wednesday got another reminder of how its fortunes are inexorably tied to the European economy.

All three major U.S. stock indexes sank after a dismal report about bad loans on the books of Spanish banks. The day before, U.S. stocks had soared after Spain held a successful auction of 2-year bonds.

The results underscored how the stock market can whipsaw on even incremental news out of Europe, and it has done just that for the past couple of weeks. In the 12 trading days of the second quarter so far, the Dow has fallen by triple digits four times, with Europe as a notable factor. Twice, it has risen by that same proportion.

It's not just the news itself, which can vary from hopeful to horrific and back again in just a couple of days. It's that investors have been inconsistent in how they react, sometimes shrugging off what seems like significant developments and at other times seizing on what seems piecemeal.

The Dow Jones industrial average fell 82.79 points to 13,032.75. That was a U-turn from Tuesday's gain of 194 points.

The euro fell and Treasury prices rose as nervous investors looked for safe places to store their money. The yield on the 10-year Treasury note fell back below 2 percent and was 1.98 percent in afternoon trading.

The Standard & Poor's 500 fell 5.64 points to 1,385.14 and the Nasdaq composite index fell 11.37 points to 3,031.45. The declines come after a stellar first quarter, when the Dow and the S&P 500 both recorded their best openings to the year since 1998.

To be sure, the European debt crisis isn't new. But Wednesday brought fresh reminders that the situation is impossible to predict.

The International Monetary Fund issued an unsettling report saying banks could cut back significantly on lending to preserve capital. A Dutch bank refused to give a break to Greece's Hellenic Railway Organization and Athens' metro on money they owe, underscoring how difficult it will be for indebted countries to hammer out rescue agreements when there are so many competing interests to please. And a leader of the European Union slammed the 27 member countries, scolding them for administrative barriers that keep them from sharing workers and resources and potentially endangers any recovery.

Spain reported that the proportion of bad loans at its banks has risen to an 18-year high, and its benchmark stock index fell 4 percent.

For all the headlines that the Greek crisis generated, Spain is potentially a much bigger problem. Greece makes up about 2 percent of the gross domestic product of the 17 countries that use the euro, but Spain makes up 11 percent. Its problems also raise questions about how far the crisis will spread.

Investors will be closely watching Spain's sale of 10-year bonds Thursday. Those results could drive the market for the rest of the week.

The Associated Press contributed to this report.