NEW YORK — Financial markets were jolted for a third day Wednesday by fears that a partial meltdown may have occurred at a nuclear plant in Japan. Stocks erased nearly all of their gains for the year.
The losses were broad. Each of the 30 stocks that make up the Dow Jones industrial average fell, with IBM and General Electric losing the most. All 10 company groups in the Standard & Poor’s 500 index, the basis for most U.S. mutual funds, lost ground.
Stocks dropped sharply at midmorning after the European Union’s energy chief was quoted as saying Japan’s nuclear crisis could get worse. Japan’s economy, the third-largest in the world after the U.S. and China, accounts for about 10 percent of U.S. exports.
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, rose 21 percent to 29.40, the highest level since July.
“The risks have risen, and you have to be mindful of them,” said David Joy, chief market strategist at Columbia Management in Boston. “It’s difficult to nail down what’s accurate information coming out of Japan and what isn’t. There’s concern that the problems at the nuclear plants are far more serious than the problems associated with the earthquake.
“In addition to that, there’s ongoing housing weakness in the U.S. and a fear premium built into the oil market. That’s why you have to hedge your bets.”
Treasury prices jumped, sending yields to their lowest levels this year as investors piled into investments seen as more stable.
“Investors are moving away from anything that has an element of risk with it because they don’t know what’s happening in Japan,” said Bill Stone, chief investment strategist at PNC Wealth Management.
The Dow Jones industrial average fell 242.12, or 2 percent, to 11,613.30. It was the worst drop since Aug. 11. The Dow has lost 3.6 percent over the past three days, its worst three-day loss since last July.
The S&P fell 24.99, or 1.9 percent, to 1,256.88 — leaving it down 0.1 percent for the year, having been up as much as 6.8 percent in February. When dividends are included, however, the index has had a total return of 2.4 percent for the year, according to FactSet.
The Nasdaq composite fell 50.51, or 1.9 percent, to 2,616.82. It is down 1.4 percent for the year.
