Rough day for stocks: S&P 500, Nasdaq erase year's gains

stock marketThe S&P 500 lost nearly 25 points, or 2%, Wednesday. That steep drop put the benchmark index down 0.1% for the year. By Hibah Yousuf, staff reporter

NEW YORK(CNNMoney) -- A sell-off in U.S. stocks accelerated Wednesday, with all three major indexes ending at their lowest levels of 2011.

The S&P 500 and Nasdaq composite erased their gains for the year, while the Dow is barely hanging on, up only 0.3% in 2011.

Trading was extremely choppy as investors tried to sort out disappointing U.S. housing data against the backdrop of developments in Japan.

It didn't help that European Union energy commissioner Günther Oettinger sounded a warning bell about increased risks related to Japan's crippled nuclear reactors at a meeting in Brussels.

Moreover, the U.S. Embassy in Tokyo cautioned American citizens who live within 50 miles of the damaged Fukushima Daiichi nuclear plant to evacuate or take shelter indoors.

"Today's not a good news day, and the market is reacting emotionally," said Fred Dickson, chief market strategist at D.A. Davidson & Co.

The Dow Jones industrial average (INDU) tumbled 242 points, or 2%, with all 30 components of the blue chip index in the red. IBM (IBM, Fortune 500), General Electric (GE, Fortune 500) and American Express (AXP, Fortune 500) led the decline. The index was down almost 300 points at its low for the day.

The S&P 500 (SPX) slipped 25 points, or 2%, to end at 1,256.88. The broad index closed 2010 at 1,257.64.

The Nasdaq (COMP) lost 51 points, or 1.9%, to finish at 2,616.82. The tech-heavy index closed at 2,652.87 last year.

Global concerns also pushed the dollar below ¥80 briefly, hitting ¥79.75, matching the record low hit in April 1995 (More on currencies).

Wall Street's most widely cited measure of volatility, the VIX (VIX), surged more than 20% to 29.40. Earlier, it climbed above 30 for the first time since July.

Dickson is advising his clients to get to the sidelines until the picture of the nuclear threat in Japan becomes clearer.

Wednesday's declines came on the heels of a sharp sell-off in the previous session, which was dominated by worries about Japan.

Japan in crisis: In a televised speech Wednesday, Japan's emperor told citizens not to give up hope as the country grapples with an epic earthquake.

"It's quite rare of the emperor to appear on television, and that has made investors a little nervous," said David Jones, chief market strategist with IG Markets in London.

Prior to the speech, Tokyo's Nikkei index rose 5.7%, rebounding from two days of losses that had drained more than 16% from the index.

The increasingly desperate situation at Japan's nuclear plants is keeping investors on edge.

Stunned by the devastation in Japan, they have been reducing their exposure to risky assets and flocking to investments that are considered safe, including U.S. Treasuries. Investors continued to buy up U.S. government debt Wednesday, sending the 10-year yield down to 3.23% from 3.32% late Tuesday.

Aside from Japan, Moody's Investors Service cut Egypt's rating by one notch, further into non-investment grade quality.

And late Tuesday, Moody's downgraded Portugal's credit rating from A1 to A3 -- a lower investment grade status. And Fitch downgraded Bahrain's debt to below investment grade, following a government clash with protesters.

Asian markets ended higher, with the Shanghai Composite index rising 1.2% and Hong Kong's Hang Seng index edging up 0.1%.

European markets closed sharply lower. The FTSE 100 dropped 0.8%, and France's CAC 40 and DAX in Germany tumbled more than 1%. (World markets)

Economy: The government said new home construction fell 22.5% in February, more than economists were expecting, while the number of permits for future housing construction fell 8.2% to all all-time low.

Separately, the government's Producer Price Index showed that prices at the wholesale level jumped 1.6% in February, which was much more than expected.

Commodities: Oil prices -- which fell nearly 4% on Tuesday -- were higher Wednesday, as concerns about the ongoing turmoil in North Africa and the Middle East were revived. Oil for April delivery gained 80 cents, or 0.8%, to settle at $97.98 a barrel.

Gold futures for April delivery climbed $3.30 to settle at $1,396.10 an ounce.  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.08%4.25%
15 yr fixed3.17%3.23%
5/1 ARM3.30%3.37%
30 yr refi4.06%4.19%
15 yr refi3.16%3.18%
Rate data provided
View rates in your area
Find personalized rates:
Index Last Change % Change
Dow 17,122.01 15.31 0.09%
Nasdaq 4,569.62 -1.02 -0.02%
S&P 500 2,000.12 0.10 0.00%
Treasuries 2.36 -0.03 -1.25%
Data as of 1:12am ET
Company Price Change % Change
Bank of America Corp... 16.20 -0.13 -0.80%
Apple Inc 102.13 1.24 1.23%
Facebook Inc 74.63 -1.33 -1.75%
Yahoo! Inc 38.18 0.39 1.03%
Pfizer Inc 29.49 0.28 0.96%
Data as of Aug 27


Staggering interest from the Chinese in an immigration program has led the U.S. to run out of available visas for the first time ever. More

Former Fed chief Ben Bernanke believes the 2008 financial crisis was the worst in global history, topping even the Great Depression. More

Snapchat has gotten a $20 million funding round from Kleiner Perkins, valuing the company at $10 billion, according to the Wall Street Journal. More

Utah State professor Michael Glauser cycled 4,000 miles this summer, visiting 100 entrepreneurs across the country. Here's a snapshot of how they grew their businesses. More

Five CNNMoney readers share stories about saving that you can learn from: What they would do differently if they had another chance. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.