Wall Street slides 1 percent on Europe fears

NEW YORK (Reuters) - U.S. stocks fell sharply on Wednesday as political uncertainty in Greece and the frail state of Spanish banks fueled fears the region's debt crisis would worsen.

Spain will demand banks set aside another 35 billion euros ($45 billion) against loans to the ailing building sector, sources told Reuters. Huge bank losses have raised fears the country may need an international bailout.

U.S.-listed shares of Banco Santander SA dropped 6.5 percent to $5.96 while European shares were off 1.2 percent. <.EU>

"There's a big fear that the banking system will deteriorate further there," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. "As the region descends into recession, how will they keep the system stable?"

Political gridlock in Greece also dented sentiment. The country moved closer to a second snap election as the head of the biggest party attacked leftist leader Alexis Tsipras, saying his plans for a new government would push Greece out of the euro zone.

The turmoil in Europe has helped drive declines on Wall Street as the corporate earnings season winds down and few domestic economic indicators were released.

The Dow Jones industrial average <.DJI> slid 171.69 points, or 1.33 percent, at 12,760.40. The Standard & Poor's 500 Index <.SPX> was down 19.10 points, or 1.40 percent, at 1,344.62. The Nasdaq Composite Index <.IXIC> tumbled 42.22 points, or 1.43 percent, at 2,904.05.

The S&P is down 3.4 percent so far this month while the Dow is on track for a sixth straight day of losses. However, on both Monday and Tuesday equities posted late-day rebounds that curtailed session losses.

Walt Disney Co reported quarterly earnings that beat expectations late Tuesday on strong theme park attendance and higher cable network advertising revenue. Shares of the Dow component rose nearly 1 percent to $44.71.

Macy's Inc earnings rose more than expected, but the stock fell 4.4 percent to $37.78 on disappointment the department store chain didn't change its outlook.

With 439 of S&P 500 companies reporting results as of Wednesday, 67 percent exceeded estimates, according to Thomson Reuters data. At the start of earnings season, more than 80 percent had beaten estimates.

Yahoo Inc dropped 2 percent to $15.04. Company director Patti Hart, who led the hiring process of Chief Executive Scott Thompson, will leave the board as the Internet company investigates Thompson's educational credentials, sources said.

(Editing by Jeffrey Benkoe)

WhatsAppFacebookTwitterLinkedinBeloudBluesky