--Stocks end the day broadly lower
--DJIA down 126.79; S&P 500 falls 13.61
--All 10 S&P 500 sectors lower
By Alexandra Scaggs
NEW YORK--U.S. stocks closed broadly lower Wednesday, with the Dow Industrials posting their first three-day string of losses this year.
The Dow Jones Industrial Average lost 126.79 points, or 0.8%, to 14995.23. On Tuesday, the Dow fell 117 points, or 0.8%, for the fourth triple-digit loss in two weeks.
The Standard & Poor's 500-stock index declined 13.61 points, or 0.8%, to 1612.52. All 10 sectors were lower. The Nasdaq Composite Index fell 36.52 points, or 1.1%, to 3400.43.
Shares staged a sharp rebound from Tuesday's losses in the first minutes of trading Wednesday, with the Dow industrials advancing as many as 119 points. But the rally quickly lost steam, and shares turned lower in afternoon trading.
"This is a very thin market," said Tim Hoyle, director of research with the Haverford Trust Co., which oversees around $7 billion of assets. "There are very little long-term investors, and it's very much fast-money trading. The market had a year's worth of gains in four months...We're seeing the markets digest that."
Stocks, bonds and currencies world-wide have made sharp moves in recent weeks as investors became concerned that the Federal Reserve would start to roll back its bond-buying program. Blue-chip stocks have made seven triple-digit swings in the past 11 sessions, after a steady climb in the first months of the year. The market's so-called "fear gauge," the CBOE Volatility Index, rose to 8.4% to 18.50, its second-highest close of the year.
"Volatility coming back to the market doesn't surprise us," said Mr. Hoyle. "We're due for a little bit."
Haverford is buying technology and health-care shares, and has cut back on some holdings in big dividend payers in recent weeks--the firm halved its holdings in Kimberly-Clark, for example. Its shares were lower midday on the New York Stock Exchange.
"That's the part of the market most at risk to an extreme dislocation, or a correction because of moves the Fed will make," Mr. Hoyle said.
With no major economic news out Wednesday, and many investors reluctant to make big moves ahead of next week's key Federal Reserve policy meeting, short-term traders were taking their cue from the dollar's moves against the yen. On Wednesday, as the dollar fell as low as 95.13 yen from Y96.02, stocks tracked the exchange rate lower.
With the quiet day for data, "everyone's watching these macro trends in the market," said Michael O'Rourke, chief market strategist for JonesTrading.
Still, even with the currency swings, "there's no panic out there," he said.
In Europe, the Stoxx Europe 600 reversed early gains to close 0.4% lower, despite better-than-expected euro-zone data. Industrial production in the euro zone increased 0.4% in April, beating forecasts.
Some focus remained on the German Constitutional Court, which was meeting for a second and final day to rule on the legality of the European Central Bank's bond-buying program.
Asian markets closed mostly lower, but there was a sharp bounce off lows for Japanese stocks. The Nikkei Stock Average was down as much as 2.4% before recovering to close down 0.2%. A weakening of the yen helped boost exporter shares. The recent volatility in Japanese stocks has added to investor jitters around the world.
Elsewhere in Asia, Australia's S&P ASX 200 lost 0.6%. Mainland Chinese markets were closed for a holiday.
July crude oil futures rose 0.5% to settle at $95.88 a barrel, while June gold futures gained 1.1% to settle at $1,391.80 a troy ounce. Demand rose for the 10-year Treasury, pushing yields up to settle at 2.231%.
In corporate news, Health Management Associates rose 11% after an activist shareholder took a more active role in the hospital operator's management, pushing for a relaxing of investor limits and signaling interest in board changes.
Tire maker Cooper Tire & Rubber rose 41% after it agreed to be bought by Indian tire maker Apollo Tyres in a deal that values its stock at $2.2 billion.
Write to Alexandra Scaggs at alexandra.scaggs@dowjones.com
NEWS SOURCE:http://online.wsj.com
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