NEW YORK - Fears of a possible rise in borrowing costs globally sent the U.S. stock market to its worst decline in a month on Wednesday.
The Dow Jones industrial average trimmed its losses late in the day but still ended with a 122.28-point decline, the biggest drop since Dec. 17. The blue-chip measure tumbled 1.1 percent from its 15-month closing high set in the previous session to end at 10,603.15.
The Nasdaq composite index fell 1.3 percent, while the Standard & Poors 500 index fell 1 percent, led by a 1.7 percent decline in the energy sector. All the S&P index's other sectors were off as well.
Investors focused on a possible cutback in lending by Chinese banks and the hefty price that Greece may have to meet to bolster its troubled economy.
The dollar soared, while stocks and commodities were hit hard as investors sought safety. Such skittishness across the financial markets has rarely been seen in 2010's early going, though some traders and analysts believe it may become the norm in the weeks ahead.
"There's been some nonchalance about the enormity of the run we've had from the March lows and the headwinds that we face moving ahead," said strategist Peter Boockvar of Miller Tabak in New York. "Now the news out of China today has jolted people out of that mentality a bit."
Spooking investors was a report that the China Banking Regulatory Commission had asked several banks to stop issuing loans. While the commission's chairman denied that he had asked banks to halt lending, Bank of China, one of the country's big banks, said it was taking steps to rein in loans.
"People are concerned that the [stock] rally so far has been driven by liquidity. If China's pulling away, it's the first step in tighter monetary policy in general, and worldwide we'll see less liquidity," said David Kupersmith, head trader at Third Wave Global Investors.
