US Stocks Finish At Day's Lows For 3rd Straight Decline; DJIA Down 2.05%

Stocks tumbled as surprisingly poor demand at a German government-bond auction raised concerns about peripheral European issues spreading to the stronger core countries.

The Dow Jones Industrial Average fell 236.17 points, or 2.05%, to 11257.55, finishing at the day's lows. The Dow's decline extends its losing streak to three straight days, shaving 4.6% off the blue-chip index and sending it to a six-week low. With Wednesday's drop, the Dow has given up more than half its historic rally in October.

The Standard & Poor's 500-stock index declined 26.25 points, or 2.21%, to 1161.79, and the Nasdaq Composite shed 61.20 points, or 2.43%, to 2460.08.

All of the 30 Dow components and all 10 of the S&P 500 sectors finished in negative territory. Leading the losses were energy, financial and materials stocks. Bank of America, Alcoa and Hewlett-Packard each lost 3.5% or more.

The declines were driven by worrying developments in Europe, where demand at Germany's auction of new 10-year government bonds was surprisingly weak, bringing the euro zone's debt fears closer to the core of the region. The disappointing demand lifted yields on Spanish and French government bonds as well.

The European Central Bank again bought Italian and Spanish bonds as confidence wavered. Also hurting bond-market sentiment were reports Belgium can't pay its agreed share of the planned rescue of the Belgian-French bank Dexia, which is seen as placing more risk at the door of the French treasury and adding another threat to the country's triple-A credit rating. Belgian and French officials denied they are renegotiating the dismantling of Dexia.

"If it heads to the core, things are going to get a lot more difficult in the U.S., even though only 15% of the S&P 500 relies on Europe," said Paul Atkinson, head of North American Equities at Aberdeen Asset Management. Even so, Mr. Atkinson said he remained confident in the fundamental strength of the German economy.

Those worries sent the euro tumbling against the dollar, falling to $1.3335, near a two-month low, from $1.3505 late Tuesday in New York. The Stoxx Europe 600 finished down 1.3%, with losses limited in part by a better-than-expected reading of the euro-zone composite purchasing-managers index for November.

Asian exchanges were broadly lower, with China's Shanghai Composite erasing early gains to close down 0.7% and Hong Kong's Hang Seng Index dropping 2.8%. The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to 48.0 in November, from a final reading of 51.0 in October. Readings below 50 imply contraction.

Investors were cautious ahead of the Thanksgiving holiday in the U.S., where many investors are planning to take four days off.

"We don't want to be too far out on a limb in case things hit the fan," said Mikel Keifer, investment strategist at Jurika, Mills & Keifer. "There aren't a lot of people who want to ride through four days wide open. People want to be able to enjoy the long weekend and hopefully that means some of the selling is overdone."

A bevy of U.S. economic indicators showed the tepid recovery was intact. Initial jobless claims ticked slightly higher last week after three consecutive declines, rising slightly to 393,000, in line with expectations. Orders for durable goods decreased 0.7% in October, while the September reading was revised sharply lower to a 1.5% drop, from an earlier estimate of a 0.6% decline.

Consumer spending, meanwhile, slowed in October, growing by just 0.1% after a 0.7% rise the month before, missing expectations. U.S. incomes rose 0.4% in October, following a 0.1% rise in the prior month.

Gold futures slipped 0.4% to settle at $1,695.70 an ounce, while crude-oil futures fell 1.9% to $96.17 a barrel. Demand for Treasurys sent the yield on the 10-year note down to 1.878%.

In corporate news, shares of Deere climbed 3.9% after the farm- and construction-equipment maker reported fiscal fourth-quarter earnings and revenue that exceeded expectations.

Pandora Media slumped 11% after the online-radio company reported a fiscal third-quarter profit versus expectations of a loss, but indicated its current-quarter loss could be wider than anticipated.

Boston Scientific edged up 0.2% after regulators approved its next-generation drug-eluting heart stent, a move expected to bolster future profits while adding a sooner-than-expected charge to its current quarterly earnings.

TiVo reversed early gains to shed 2% after reporting fiscal third-quarter losses that were narrower than expected and revenue that exceeded estimates.

By Jonathan Cheng