Efforts to contain the European financial crisis are on but there is no amicable solution in sight. At least that is what it appears. With Moody’s Investors Service warning on Wednesday that Portugal’s credit rating faces a possible downgrade and violent protestors killing three people on the streets of Athens, worries about European finances multiplied and markets fell for a second session in a row.

The Dow Jones industrial average fell 59 points, extending its two-day drop to 284. The tech-heavy Nasdaq led with a 0.9% drop and the broader S&P 500 index fell 0.7%, with its industrial, consumer-discretionary and energy sectors dropping at least 1.4%.  Only health care shares managed to end with some gains (+0.02%).

The euro dropped to a 14-month low against the dollar.  Crude prices also fell, sending shares in Marathon Oil (NYSE:MRO) down 1.2% and ConocoPhillips (NYSE:COP) off 2.2%.  shares in Occidental Petroleum Corp. (NYSE:OXY) dropped 4.2% to $82.88.  A stronger dollar weighed on commodities prices.  The Energy Information Agency reported weekly inventory levels increased 2.8 million barrels, ahead of Platt’s estimated 1.54 million barrel build. 

On the New York Stock Exchange, declining issues beat those that advanced in price by a four-to-one margin on volume of 1.5 billion shares.  The CBOE Vix, the market’s fear gauge, jumped to its two month high of 25.12.

InterMune (NASDAQ:ITMN) saw its shares plunging more than 75% after the U.S. Food and Drug Administration refused to approve its experimental drug to treat a rare lung disorder.

The decline was broad based, with only three — Wal-Mart (NYSE:WMT), Travelers (NYSE:TRV) and Hewlett-Packard (NYSE:HPQ) — of the thirty DJIA components managing to close with gains.  Wal-Mart (NYSE:WMT) gained on expectations that a double-dipping economy could see consumers revisiting its stores for better bargains.  Best Buy Co. (NYSE:BBY) dropped 3.7%.

Government debt was in demand again. The yield on the benchmark 10-year Treasury note fell to 3.54% from 3.60% late Tuesday.

A stronger dollar and concerns about European economic recovery sent industrial players such as DuPont (NYSE:DD), 3M (NYSE:MMM) 1.2%, and Caterpillar (NYSE:CAT) down 1.9%, 1.2% and 1.1%, respectively. Shares in Disney (NYSE:DIS) shed 3.4%.  Time Warner (NYSE:TWX) posted the highest quarterly profit in the firm’s history, beating consensus estimates comfortably, but the shares fell 2.4%.

Zacks Investment Research