NEW YORK - Early gains in the stock market evaporated Wednesday after worries about Europe's debt crisis overshadowed signs of growth in the United States. Bond prices fell, sending long-term interest rates higher again.
The euro fell 1.2 percent against the dollar after Moody's said it might lower Spain's credit rating. The stronger dollar hurts U.S. companies that do a lot of business overseas by making their products more expensive to foreign customers.
The Standard & Poor's 500 index, the broadest measure of large U.S. companies, fell 0.51 percent.
Stock prices started the day higher after reports showed that U.S. manufacturing is growing and inflation remains under control. The Federal Reserve said U.S. factory output rose for the fifth straight month in November. A separate report showed that consumer prices stayed flat last month.
In the late afternoon, the Senate overwhelmingly passed an $858 billion package that will extend tax cuts passed during the Bush administration for an additional two years. The measure now goes to the House, where it is expected to pass despite complaints by Democrats over what they see as overly generous estate-tax rates for the rich.
The unfinished tax bill made some investors pause. "No one is going to make any major planning decisions until this bill gets passed," said Tim Speiss, a partner at EisnerAmper L.L.P., a financial-planning firm. "I'm working with a lot of companies who are postponing deals until they know what the tax rates will be."
The Dow Jones industrial average fell 19.07, or 0.17 percent, to 11,457.47.
The broader Standard & Poor's 500 index fell 6.36, or 0.51 percent, to 1,235.23.
The Nasdaq composite index fell 10.50, or 0.40 percent, to 2,617.22.
Coca-Cola Co. shares rose 1.31 percent to lead the 30 stocks that make up the Dow index. Shares of Alcoa Inc., which fell 1.69 percent, were the worst performing stock in the index.
Consumer-staples companies were the only one of the 10 groups that make up the S&P 500 index to rise.
Shares of Boston Beer Company Inc., the maker of Sam Adams beer, rose 12.06 percent to $94.97 after it raised its 2010 earnings forecast. The company said it was shipping 12 percent more products than last year.
Ryder System Inc. shares gained 4.76 percent after an RBC analyst raised his investment rating on the trucking company, saying he expects demand for its services to rise.
Treasury prices fell, pushing their yields higher. The yield on the 10-year Treasury note rose to 3.53 percent from 3.45 percent the day before. That is the highest the yield has been since May 13. The yield helps set interest rates on mortgages and other kinds of loans.
Bond yields have been rising since early October because investors expect the economy to improve. They also anticipate higher budget deficits because of the tax-cut package.
Two stocks fell for every one that rose on the New York Stock Exchange. Trading volume came to 1.1 billion shares.