May 9, 2012 at 9:46 AM ET
NEW YORK — U.S. stocks fell sharply at the open on Wednesday as political uncertainty hung over Greece and concerns arose over the frail state of Spanish banks.
The Dow Jones industrial average dropped 113.87 points, or 0.88 percent, to 12,818.22. The Standard & Poor's 500 Index dropped 13.77 points, or 1.01 percent, to 1,349.95. The Nasdaq Composite Index dropped 32.32 points, or 1.10 percent, to 2,913.95.
Spain will demand banks set aside another $45 billion against loans to builders as it battles to rebuild confidence, sources told Reuters. Huge bank losses have raised fears the country may need an international bailout.
Political gridlock in Greece also dented sentiment. The country moved closer to a second snap election after the head of the biggest party launched a new attack on leftist leader Alexis Tsipras, saying his plans for a new government would push Greece out of the euro zone.
"If Greece doesn't receive bailouts, they'll likely be expelled from the EU, and if that happens all hell could break loose over there," said Jay Feuerstein, chief executive of asset management firm 2100 Xenon Group in Chicago.
The turmoil in Europe has been a big reason for declines on Wall Street lately as the corporate earnings season winds down and few domestic economic indicators are influencing equities.
"There are many investors willing to put money to work on dips," said Feuerstein. "But I'm not sure that will work this time. I think the consistent downward motion is where we are right now."
With 439 of S&P 500 companies reporting results as of Wednesday morning, 67 percent exceeded estimates, according to Thomson Reuters data. At the start of earnings season, more than 80 percent beat.
The S&P 500 fell through support at 1,350 in Tuesday's decline, reaching levels not seen since early March, but buyers emerged late in the session and Wall Street ended off its lows.
Reuters contributed to this report.