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Stocks Pare Losses in Final Hour

Tickers in this article: YHOO FOSL RAX ^DJI ^GSPC DIS MCD BAC ^IXIC WEN

NEW YORK ( TheStreet) - U.S. stocks dropped Tuesday as political turmoil in Greece renewed concerns about the country's ability to meet the terms of its bailout and remain a member of the euro zone.

The major U.S. equity indices did stage an impressive bounce off their lows late in the session though, provide some small silver lining for the bulls.

The Dow Jones Industrial Average finished lower by 76 points, or 0.6%, to close at 12,932. The blue-chip index ran as low as 12,810 during volatile trading, a level unseen since intraday action on April 23.

The S&P 500 shed 5.86 points, or 0.4%, to finish at 1364. The index's session low was 1348, a level unseen in two months.

The Nasdaq lost nearly 12 points, or 0.4%, at 2946. Its nadir for the day was 2900, which it also hasn't glimpsed in two months.

Demand for bonds and the U.S. dollar spiked higher, while gold and other commodities endured a deep sell-off, with gold prices briefly falling below $1600 an ounce.

Breadth within the Dow was negative with 25 of the index's 30 components finishing lower. The biggest percentage losers among the blue chips were Hewlett-Packard(HPQ) , Alcoa(AA) , Bank of America (BAC) , Cisco (CSCO) and McDonald's(MCD) .

Bank of America shares lost more than 2% as CEO Brian Moynihan faces a May 18 deadline to give testimony in a lawsuit brought by MBIA(MBI) , an event that's seen as putting increased pressure on the bank to reach a settlement expected to cost some $2 billion, according to an analyst.

Separately, the bank has also begun reaching out to eligible borrowers to reduce principal on their mortgages by as much as $200,000 as part of its mortgage settlement pact with states attorneys general. The bank holds its annual shareholder meeting on Wednesday.

Walt Disney (DIS) , Merck(MRK) , Johnson & Johnson (JNJ) , AT&T(T) and Verizon(VZ) finished in the green.

Disney reported its quarterly results after the bell, beating expectations with a fiscal second-quarter profit of 58 cents per share vs. the consensus estimate of 55 cents. Shares were up 2.4% in aftermarket trading, after climbing more than 1% on Tuesday.

In the broader market, losers outpaced winners by a margin of nearly 2-to-1 on the New York Stock Exchange , and were nearly even on the Nasdaq.

The VIX, the so-called fear gauge, ended the session at 18.78 after cresting above 20 earlier in the session. The VIX measures implied volatility through options pricing for the S&P 500. A reading above 20 is seen as the point where fear is on the rise.

Stocks barely budged Monday as Wall Street reacted with restraint to the shifting political landscape in Europe following weekend elections in France and Greece. But investor worries were intensified Tuesday as the political gridlock in Greece showed no signs of relief.