NEW YORK — Investors aren’t sold on a rescue of Spanish banks.
Stocks fell today on Wall Street, an early rally faded on European stock exchanges, and borrowing costs for Spain crept higher on the bond market — all expressions of doubt about the latest answer for the debt crisis in Europe.
“The Spanish deal is a temporary fix,” said Jim Herrick, director of equity trading at Baird & Co. “There are broader issues in the eurozone that still need fixing.”
At midday, the Dow Jones industrial average was down 35 points at 12,518. The Standard & Poor’s 500 index was down three points at 1,322. The Nasdaq composite was down 10 points at 2,848.
European countries committed over the weekend to lend Spain up to $125 billion to distribute to its banks, which were crippled by a bust in real estate prices four years ago and were in danger of failing.
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 would 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 investor relief was short-lived.
France’s main stock index closed down 0.3 percent, and Germany’s rose just 0.2 percent. Both indexes were up more than 2 percent earlier in the day. Spain’s benchmark stock index fell 0.5 percent.
More alarming, the yield on Spanish 10-year bonds climbed 0.29 percentage point to 6.47 percent, suggesting the bond market is losing confidence in Spain’s finances. The yield had fallen earlier.
Investors are nervously awaiting an election this weekend in Greece that will help determine whether that country is forced out of the 17-member club of countries that use the euro currency.
Italy also 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 rescue.
The yield on the Italian 10-year government bond crept higher, too — by 0.29 percent from Friday to 5.84 percent.
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 1.60 percent from 1.64 percent Friday.
Also adding to market worries is 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 more than 4 percent, while AK Steel Holding fell even further, 12 percent, after its stock was downgraded by an analyst.
Apple stock climbed $7, to $587.35, while investors waited for a developer conference in San Francisco at which CEO Tim Cook was expected to show off new software for the iPhone.
The company was also expected to reveal mapping technology that could bump Google Maps from its default place on Apple products.
Among other stocks making big moves today:
— Micronetics Inc. nearly doubled, up 94 percent, after the maker of microwave and radio frequency components agreed to a takeover by Mercury Computer Systems Inc.
— EnergySolutions fell 53 percent 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 rose over 3 percent after federal regulators cleared Duke Energy’s proposed takeover of the company, a deal that will create the nation’s largest electric utility.