Bulls’ hopes fade as Wall Street fails to sustain rebound

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Stocks flunked a key test Wednesday, as major market indexes were unable to build on Tuesday’s big turnaround.

That may boost the risk of another ugly Thursday, which has become the market’s weekly Day of Dread this month.

Weighed down in part by fresh concerns about Europe’s debt crisis, the Dow Jones industrial average closed down 69.30 points, or 0.7%, to 9,974.45, the first time the index has finished a session below 10,000 since Feb. 8. Broader market indexes also were mostly lower.

The market had staged a huge reversal Tuesday, with the Dow rebounding from a loss of 292 points early in the day to close off just 22 points. Bulls had hoped to keep that momentum going Wednesday to send a signal that stocks had gotten cheap enough in this month’s slump.

Buyers came in at the opening bell, lifting the Dow 135 points in the early going, on some relatively upbeat U.S. economic data. But the rally faded as the day wore on.

“It’s definitely discouraging that we can’t put together two good days in a row,” said Ryan Detrick, a technical-market analyst at Schaeffer’s Investment Research in Cincinnati. “The volatility really sums up how on edge everyone is.”

The Dow hasn’t risen for two consecutive days since April 28-29. It is down 11% from its 19-month high reached April 26 -- still a relatively modest decline, compared with the losses in many other world markets.

U.S. stocks were rattled Wednesday after a Financial Times report said China was reviewing its holdings of euro zone countries’ debt as the euro currency continues to sink. The euro dropped to $1.218 from $1.232 on Tuesday. It is nearing the recent four-year low of $1.214 set May 18.

The euro also was hurt by another jump in Spanish government bond yields on a report that a large Spanish bank has been unable to roll over $1 billion in short-term funding this month. Investors fear that Spain could be forced to mount a huge banking-system bailout at a time when the country’s own finances are shaky.

The U.S. stock market’s slide Wednesday may embolden the bears. They also have the calendar on their side: The last three Thursdays have been major downers for the market -- including the “flash crash” of May 6, when the Dow closed off 347 points, and last Thursday’s 376-point plunge.

-- Tom Petruno