US stocks sink in early trading as China fails to halt a market plunge

EnergyAssociated Press

U.S. stocks are heading lower early Wednesday amid growing concerns that trouble in China's markets could spread. The drop wiped out the Standard & Poor's 500 index's gains for the year.

KEEPING SCORE: The Dow Jones industrial average declined 185 points, or 1 percent, to 17,588 as of 10 a.m. Eastern time. The S&P 500 gave up 23 points, or 1 percent, to 2,059. The Nasdaq fell 62 points, or 1.3 percent, to 4,933.

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REPORT CARDS DUE: The unofficial start to the second-quarter earnings season starts Wednesday when Alcoa turns in its results after the closing bell. Analysts forecast that companies in the S&P 500 will report that their overall earnings dropped 4 percent in the quarter, according to S&P Capital IQ, as a rising dollar and falling oil prices pinched profits.

GLITCH: United Airlines had to temporarily ground all its flights in the U.S. because of a problem with its computer system. It's the second time in two months that the Chicago carrier has been hit by technical troubles. Shares in United Continental Holdings, the parent company, fell $1.01, or 2 percent, to $53.30.

CHINA: The Shanghai Composite lost 6 percent Wednesday, despite new attempts by the government to reverse the slide. Beijing ordered state-owned companies to buy shares and promised more credit to finance trading. Chinese stocks have plunged in the last month but are still up 70 percent over the past year. Hong Kong's Hang Seng tumbled in the last hour of trading, a victim of the turmoil in mainland Chinese markets, to close with a loss of 5.9 percent.

RESPONSE: "Everyone has come back to reality. The so-called bull market is over for now," said Jackson Wong, an associate director at United Simsen Securities Ltd.

GREECE: Hopes for a resolution to Greece's crisis rose after the country applied for a new three-year loan and said it would have a plan of reforms in coming days. The deeply indebted country needs a financial lifeline from its European creditors before its banks collapse, which could pave the way for an exit from the euro currency.

EUROPE: Major markets were broadly higher as talks continue on Greece's debt woes. Germany's DAX gained 0.5 percent, and France's CAC 40 rose 0.7 percent. Britain's FTSE 100 added 0.7 percent.

ASIA'S DAY: Japan's Nikkei 225 fell 3 percent, and South Korea's Kospi lost 1.2 percent. Australia's S&P/ASX 200 shed 2 percent.

CRUDE: Benchmark U.S. crude was up 35 cents to $52.71 a barrel on the New York Mercantile Exchange. Brent crude rose 81 cents to $57.66 a barrel in London.

BONDS AND CURRENCIES: U.S. government bond prices edged up, nudging the yield on the 10-year Treasury down to 2.23 percent. The euro rose to $1.1049. The dollar fell to 121.08 yen.