By Geoffrey Rogow

A sharp decline in prices of U.S. Treasury securities fueled increased economic concerns and sent stocks sharply lower Wednesday, erasing nearly all of Tuesday's gains.

Industrials, such as 3M and United Technology, were particularly weak, while a slate of financials, including American Express and JPMorgan Chase, also pushed lower.

Selling in both stocks and Treasurys surprisingly came after a well-bid five-year note sale. Treasurys were hard hit first, with the 10-year note's yield rocketing to a fresh high of 3.732%, amid selling by mortgage servicers hedging against a rise in interest rates. Stocks' decline came after the yield on 10-year Treasurys broke above 3.55%, which had recently proven a tough level to break. Traders sold Treasurys and stock-index futures as the yield pierced that level, which in turn pushed cash prices for stocks lower.

"There is this huge pile of money in U.S. Treasurys just because of a flight to safety. When they finally peak out from their desks, a lot of that money will leave and go back to other places," said Thompson Phillips Jr., president of T.S. Phillips Investments. "As long as the dollar doesn't go into a free fall, stocks can do ok."

For at least Wednesday, the flood of investors coming out of Treasurys wasn't going back into stocks. A weakened dollar over the past week and some skittishness ahead of economic reports due out on Thursday and Friday were partly to blame.

After a 196-point jump on Tuesday, the Dow Jones Industrial Average on Wednesday closed down 173.47 points, or 2.05%, at 8300.02. Pacing the index lower, JPMorgan chase lost 1.88, or 5.2%, to 34.66 and American Express lost 1.07, or 4.4%, to 23.50. Both financials had been at the forefront of Tuesday's gains.

Among other indices, the Standard & Poor's 500 pushed below the important psychological level of 900, closing down 17.27, or 1.90%, at 893.06. The index has now fallen in five of the last six sessions.

Industrials were particularly weak, with 3M losing 1.87, or 3.2%, to 56.04, and United Technologies off 1.30, or 2.5%, at 51.44.

The Nasdaq Composite slid 19.35, or 1.11%, to 1731.08.

In a data-heavy week, investors paid close attention to new information from the National Association of Realtors, which said existing-home sales climbed modestly in April as buyers took advantage of foreclosures and snatched up property carrying discounted price tags. Home resales rose by 2.9% to a 4.68 million annual rate from 4.55 million in March. The NAR originally reported March sales fell 3.0% to 4.57 million.

Despite the increase in housing activity, the median sale price slid more than 15%, and the number of unsold homes on the market at the end of April was up almost 9% from a month earlier.

Also weighing on the market, General Motors fell 29 cents, or 20%, to 1.15, as the car maker moved ever closer to a bankruptcy filing. GM was pushed lower after saying that not enough of its bondholders agreed to swap their debt for stock.