Stocks opened slightly lower Wednesday as worries over the European debt crisis persist, overshadowing a strong auction of Italian government debt.The European Central Bank said the continent's banks parked a record $590.72 billion overnight at the bank, reflecting distrust in the European banking system.
Italy held two successful bond auctions, paying much lower borrowing rates than it did in other auctions last month. The strong demand from investors raised hopes that Italy would be able to avoid sinking into a financial crisis, as smaller countries like Greece and Portugal have.
The Dow Jones industrial average was down 56 points at 12,235 as of 10 a.m. Eastern. Materials and energy companies were leading the declines. Alcoa Inc. fell 1.4 percent. Only one of the 30 stocks in the Dow average rose, AT&T Inc.
Trading was very quiet in a holiday-shortened week. Markets were closed Monday in observance of Christmas. The Dow closed 2 points lower Tuesday.
The S&P 500 was down 6 points at 1,258. The Nasdaq composite was down 17 points at 2,608.
The Bank of Italy raised $11.8 billion in two bond auctions, reflecting investor approval of the country's recently passed austerity measures. The yield on Italy's six-month bill offering was half the interest rate the country paid in a similar auction last month. The yield on the country's 10-year bond remained dangerously high, however, at 6.93 percent. It had risen to 7 percent Tuesday, a level that is considered unsustainable.
Italy is the euro zone's third-largest economy and is considered too big to save under the euro zone's current bailout funds. Investors have grown fearful over the past few months that Italy will find it difficult to pay off its massive debts, which stand at around $2.5 trillion.
Investors particularly feared that a global contagion could spread if any of the European countries defaulted on their debt. European banks held large quantities of debt from their countries.
The banks' distrust of each other was reflected in the record amounts of money they have parked with the European Central Bank. Instead of making money by lending to each another, banks have chosen to hold money at low interest rates at the ECB.
The worries were reflected in U.S. bank stocks. Bank of America Corp. fell 2 percent, while Regions Financial Corp. fell 3 percent.