European debt flared again as a worry for Wall Street and drove stocks Wednesday to their worst loss in a month. The Dow Jones industrial average lost 125 points, and the price of gold plunged to its lowest level since January.
It was only the second time this year the Dow has recorded a triple-digit decline. The average gained 8 percent from January through March, its best first quarter since 1998, but has lost 1 percent already in April.
The Dow was down as much as 179 points earlier in the day. It recovered to close down 124.80 at 13,074.75. Only four of the 30 stocks that make up the average rose for the day.
A disappointing auction of government debt in Spain signaled that investor confidence in that country's finances is weakening. Spain announced tax increases and budget cuts last week, which could hurt its economy further.
Investors had scarcely stopped worrying about the fate of Greece when Spain took its place as the flashpoint of the debt crisis that has hobbled Europe for more than two years.
In the U.S., the Standard & Poor's 500 index finished down 14.42 at 1,398.96. The technology-heavy Nasdaq composite index fell 45.48 to 3,068.09, its worst decline of the year and the sixth loss in seven days.
Crude oil fell $2.54 a barrel to $101.47, its lowest level since mid-February. Investors looking for safe places to park money drove prices for U.S. government debt and the value of the dollar higher.
The euro fell as low as $1.3106, its lowest point against the dollar in more than two weeks. It traded at $1.3217 late Tuesday.
Commodity prices fell sharply. Gold plunged $57.90, or 3.5 percent, to $1,614.10 an ounce. Many investors hold gold as a hedge against a weakening dollar.
Gold doubled in price after the 2008 financial crisis and almost hit $1,900 an ounce, driven partly by fear about the global economy and partly by investors who saw an opportunity to make money from gold's strong rally.
Silver fell more than 6 percent Wednesday, and copper fell 3 percent. The price of crude oil fell $2.54 per barrel to $101.47, its first close below $102 since mid-February.
On Tuesday, minutes from the last meeting of the Federal Reserve showed that members had a sunnier view of the economy because of strong gains in the job market in December, January and February.
The Fed signaled that because the economy is improving, it is unlikely to buy bonds to stimulate the economy further. The Fed launched bond-buying programs in 2008 and 2010 to lower interest rates and help stock prices.
Payroll processor ADP said Wednesday that the economy added 209,000 private-sector jobs in March. Economists think the government's monthly unemployment report on Friday will show a gain of 210,000 for March. Job growth averaged 245,000 from December through February.
Traders sold European bonds and bought safer investments such as German bunds and U.S. Treasurys. The yield on the 10-year Treasury note fell to 2.23 percent from 2.29 percent late Tuesday.
Bank stocks, which typically decline when the European debt crisis flares, dropped sharply. Citigroup dropped 3.6 percent, Morgan Stanley fell 3.5 percent, JPMorgan Chase 2.2 percent and Bank of America 3 percent.
"Despite the relatively strong run we've had in the U.S., there's a number of headwinds out there, the main one being Europe," said Bernie Kavanagh, vice president portfolio management at the investment firm Stifel Financial.
The stocks of materials and mining companies fell. Newmont Mining was down 3.6 percent, while Freeport-McMoran Copper fell 1.4 percent. Aluminum maker Alcoa Inc. fell 2.5 percent, one of the biggest declines in the Dow.
In other corporate news:
— Sears fell 7.4 percent. The retailer is reportedly planning to sell the casual clothing line Lands' End, which it acquired in 2002.
— SanDisk, which makes memory cards and chips, plunged 11 percent, the most in the S&P, after the company cut its forecast for first-quarter revenue because of weaker demand and lower prices.
— Home marketer Hovnanian Enterprises Inc. dropped 8.5 percent on fears that a public stock offering of 25 million shares would dilute share value. The company is selling stock to reduce debt.
— GMX Resources, an independent oil and gas producer, shot up 24 percent after the company reported that a well drilled in McKenzie County, North Dakota was producing oil at a 50 percent higher rate than a nearby well.