US Stocks Slide Amid Greek Political, Bank Uncertainty

The Dow industrials fell for the ninth session in 10 as comments from Greek political leaders sparked accelerating concern about the country's potential exit from the euro zone and the health of the its banks.

The Dow Jones Industrial Average fell 63.35 points, or 0.5%, to 12632.00, its lowest close since Jan. 19.

The Standard Poor's 500-stock index slipped 7.69 points, or 0.6%, to 1330.66 and the Nasdaq Composite dropped 8.82 points, or 0.3%, to 2893.76.

Greek president Karolos Papoulias said the country will hold new elections as talks with party leaders to form a coalition government have failed, raising concerns that the country might exit the euro zone and that the currency bloc's weaker countries could follow. European markets retreated, with the Stoxx Europe 600 falling 0.7% for its lowest close this year.

Meanwhile Greek depositors withdrew EUR700 million from local banks on Monday, according to a transcript of remarks by Papoulias to political leaders released Tuesday. Papoulias warned that the situation facing Greece's lenders was very difficult.

"The regular amount of withdrawals out of the banking system is pretty alarming," said Jason Weisberg, senior vice president at Seaport Securities. "If they pull out of the euro zone, it could be dominoes--Italy possibly, Portugal, Spain, who knows? I think that's the overall fear, that if one goes, what's to stop all the others from going?"

The worries overshadowed steady economic readings from the U.S. and Europe. A preliminary reading showed the euro zone's gross domestic product was flat, topping economists' forecasts for a slight contraction. Germany's economy expanded more than expected.

Meanwhile, April retail sales and consumer prices in the U.S. were little changed, in-line with estimates. Manufacturing activity in the New York region rebounded more sharply than economists had predicted while U.S. home builders' sentiment rose to a five-year high.

Asian markets were broadly lower on the back of Monday's sharp U.S. losses, with Japan's Nikkei Stock Average losing 0.8% and China's Shanghai Composite giving up 0.3%.

Crude oil futures fell 0.8% to settle at $93.98 while gold futures rose 0.2% to finish at $1,556.80 an ounce. The U.S. dollar rose against the euro and the yen.

In corporate news, TJX rose 6.9%. The operator of T.J. Maxx and Marshalls stores reported better-than-expected fiscal first-quarter profits and raised its current-year guidance.

Home Depot advanced 2.4%, leading declines among Dow components, after the home-improvement retailer reported fiscal first-quarter earnings that topped analyst estimates, according to FactSet Research, but missed revenue forecasts. The company raised its full-year earnings outlook to match analyst estimates.

Avon Products slid 9.7% after Coty withdrew its $10.7 billion bid to buy the company, citing Avon's delay in responding to the bid.

J.P. Morgan Chase rose 1.3%, recouping losses that followed the bank disclosing big trading losses last week.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

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