Dow Falls 179, Nasdaq Finishes down 47

NEW YORK (AP) — Unrest in Greece rattled global financial markets Wednesday. Stocks fell the most since June 1 as investors piled into lower-risk assets like the dollar and U.S. government bonds.

A report on manufacturing in the New York area also came in far below forecasts. That reignited fears that factory production, one of the few bright spots in the U.S. economy, may be weaker than many economists had believed.

Thousands of people gathered on the streets of Athens to protest government cutbacks required by international lenders. Demonstrators hurled rocks at riot police, who responded with tear gas. Greece’s prime minister said he would name a new Cabinet after talks to form a new government with opposition parties failed.

The Dow Jones industrial average fell 178.84 points, or 1.5 percent, to close at 11,897.27. The drop erased all of its 123-point gain from Tuesday and put the average on track for a seventh straight week of losses. All 30 companies in the Dow dropped, led by Aluminum maker Alcoa Inc. which lost 2.9 percent. Alcoa’s stock tends to swing with shifting moods about the global economy.

Shares in energy companies also fell. Chevron Corp. and Exxon Mobil Corp both lost more than 2 percent.

The S&P 500 index fell 22.45, or 1.7 percent, to 1,265.42. The Nasdaq fell 47.26, or 1.8 percent, to 2,631.46.

If Greece defaults on its debt it could cause investors to dump the bonds of other weak European nations like Portugal, Spain and Ireland, raising borrowing costs for those countries. It could also cause the dollar to further strengthen against the euro, making U.S. products more expensive abroad. That acts as a drag on corporate profits. Earlier in the year a declining dollar played a key role in boosting corporate earnings and sending stocks higher.

Large U.S. companies like Boeing Co., Caterpillar Inc. and Oracle Corp. sell many of their products abroad, which puts their sales and profits at risk if the dollar strengthens. Companies in the S&P 500 index get 20 percent of their profits from Europe.

June is shaping up to be the worst month for the stock market since May 2010. Stocks have risen only three days this month and have fallen 11. The Dow Jones industrial average and the Standard & Poor’s 500 index are now 7 percent below the highs they reached in late April.

“It’s sell and ask questions later,” said Steven Goldman, chief market strategist at Weeden & Co. in Greenwich, Conn.

The euro slid 2 percent against the dollar as the worsening Greek debt crisis undermined confidence in Europe’s shared currency.

U.S. government bond prices climbed as investors sought safer assets. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.97 percent from 3.10 percent late Tuesday.

In the latest sign of how Greece’s problems could affect other countries, credit ratings agency Moody’s said it may downgrade its ratings of France’s three largest banks because of their exposure to Greek debt.

Greece’s fiscal problems had appeared to be solved a year ago with a package of emergency loans, but it became clear this spring that the country would need more help from its European neighbors to avoid a default. On Monday, Standard & Poor’s slashed Greece’s creditworthiness to the bottom of the 131 countries that have ratings.

The June Empire State Manufacturing Survey came in well below forecasts. The survey from the New York Federal Reserve found that conditions for New York manufacturers are weakening and orders are falling. A measure of optimism among factory owners in the state fell to its lowest level since early 2009.

Analysts said investors should expect stock trading to be volatile as uncertainty about the economy persists. The housing market remains weak and the jobs market is sluggish. Questions loom about whether lawmakers will support raising the nation’s borrowing limit by an Aug. 2 deadline. The Federal Reserve’s $600 billion bond-buying program is also winding down at the end of June. The program was designed to keep interest rates low to encourage borrowing.

“The markets are nervous, investors are nervous, and so we expect volatility,” said Oliver Pursche, president of Gary Goldberg Financial Services.

Pandora Media Inc. jumped 9 percent to $17.42 on its first day of trading. The Internet radio company priced its initial public offering at $16 a share, the high end of its range, reflecting hot demand for online companies.

Owens-Illinois Inc. fell 13 percent after the glass container company said higher manufacturing and delivery costs led it to cut its second-quarter earnings outlook.

Five shares fell for every one that rose on the New York Stock Exchange. Despite the sell-off, consolidated trading was only slightly heavier than usual at 4.2 billion shares.