NEW YORK — A burst of enthusiasm over a rescue of Spanish banks melted away within hours Monday, and investor anxiety about the troubled finances of Europe grew on both sides of the Atlantic.
On Wall Street, stocks opened sharply higher but sank all day. Selling accelerated in the last hour of trading.
The Dow finished down 142.97, one of its biggest daily declines this year, at 12,411.23. It opened up almost 100 points.
The Standard & Poor’s 500 index ended down 16.73 points at 1,308.93, and the Nasdaq composite index closed down 48.69 points at 2,809.73.
More alarming, bond investors signaled that they are less confident about lending money to the governments of both Spain and Italy, which investors fear will be next to seek help.
Jim Herrick, director of equity trading at Baird & Co., said investors realized “that this Band-Aid approach with Spain will not solve larger problems in Europe and that this could be a long, arduous process.”
As investors considered the long-term fate of Europe, Herrick said, “it was time to sell.”
European countries committed over the weekend to funnel up to $125 billion to Spain to distribute to its banks, which have been driven almost to insolvency from a bust in real estate prices four years ago.
Spain became the fourth European nation to seek a rescue, after Greece, Portugal and Ireland.
Market strategists had hoped that the rescue in Spain would at least temporarily ease fear that debt problems in Europe will explode into a world financial crisis and hurt the fragile global economy.
Those strategists had predicted a rally in stocks after the deal was announced. But the relief was short-lived, and investors were still worried about an election Sunday in Greece that could lead to that country’s exit from the euro.
“People want to see clarity,” said Stephen Carl, head of equity trading at The Williams Capital Group, an investment bank in New York. “No one likes a situation that’s to be determined.”
Adding to the economic fear, Italy said its economy contracted by 0.8 percent in the first three months of the year, the worst showing in three years. The Italian government is struggling to fend off the perception that Italy will be next to need a rescue.
The price of oil reversed an earlier gain, falling 65 cents to $83.46 a barrel. Investors bought safer investments like U.S. Treasury notes, sending the yield on the benchmark 10-year note down to 1.59 percent from 1.64 percent Friday.
Also adding to market worries was China’s economic slowdown. A large steelmaker in China, Baoshan Iron & Steel, said it lowered steel prices as demand from makers of appliances and cars slowed.
“China is a big piece of the global economic puzzle,” Herrick said. “Any piece of news that comes out from there will be closely scrutinized.”
The news sent stocks of steelmakers sharply lower. U.S. Steel fell 6.5 percent, while AK Steel Holding fell even further, 14 percent, after its stock was downgraded by an analyst on similar concerns.
Among other stocks making big moves on Monday:
MICONETICS: It nearly doubled, rising $7.10 to $14.59 after the maker of microwave and radio frequency components agreed to a takeover by Mercury Computer Systems Inc.
ENERGYSOLUTIONS: It fell $1.97, or 55 percent, to $1.62 after the nuclear industry service company appointed board member David Lockwood as its new chief executive, and lowered its full-year adjusted earnings estimate.
PROGRESS ENERGY: It rose $1.47, or 2.5 percent, to $59.60 after federal regulators cleared Duke Energy’s proposed takeover of the company, a deal that will create the nation’s largest electric utility.