05/23/2012 01:34 pm ET Updated May 23, 2012

Dow On Pace For Lowest Close Of 2012, Thanks To Greece

U.S. stocks are headed for their worst day in six weeks, while the euro is at its lowest level in nearly two years, as markets freak out about the prospect of Greece leaving the eurozone.

Around lunch time on Wednesday, the blue-chip Dow Jones Industrial Average was down 182 points to 12,320, on track for its worst one-day loss since April 10 and its lowest close of the year. The S&P 500 stock index, meanwhile, was down 1.5 percent, and the Nasdaq Composite Index was down 1.4 percent.

Update: With about 45 minutes to go, the market has really come back a lot: The Dow was recently only down less than 60 points. At this rate, stocks will close a little bit above their worst levels of the year -- but not by much.

Update 2: The Dow ended the day down a devilish 6.66 at 12496.15. The S&P and Nasdaq actually ended in the green. Rumor has it that the rebound was driven by hopes of more stimulus from the Federal Reserve. Ridiculous.

The selling began early, as word came out of an informal dinner summit of European leaders that Germany was giving no ground in its refusal to team up with other European nations to issue joint euro bonds. Would such bonds solve the European debt crisis? Maybe not. But they could help, possibly giving troubled sovereign nations like Greece and Spain access to cheaper financing.

Germany hates the idea, though, because it might push up the country's own borrowing costs, which are currently the lowest in the eurozone and among the lowest in the world. In fact, the yield on Germany's 30-year bond fell below 2 percent, a record low, as investors scrambled for the safest investments available.

The U.S. 10-year Treasury note dropped to 1.71 percent on Wednesday, nearly a record low. Meanwhile, the Chicago Board Options Exchange Volatility Index -- commonly known as the "fear index" -- jumped above 24, near its highest level of the year.

In another sign of market anxiety, crude oil prices on the New York Mercantile Exchange fell more than 2 percent to less than $90 a barrel, the lowest since October. So there was at least a silver lining to the day's market carnage.

Another unexpected bright spot: The stock that has arguably suffered the most in recent days, Facebook, was up about 2.5 percent -- though still down more than 16 percent from its IPO price on Friday.

What the market fears is that European leaders are, as usual, waiting too long and doing too little to deal with the continent's debt problems. Once again, the most pressing problem is Greece. The Greek government recently collapsed amid a populist rejection of the belt-tightening measures that Germany and other European nations required in order for Greece to get a series of bailouts.

The risk is that Greece leaves the eurozone in a messy fashion, causing ripple effects throughout Europe and the rest of the world. The Organization for Economic Cooperation and Development on Tuesday warned that a European meltdown could hurt the global economy.

The funny thing -- not in a ha-ha sort of way, but in an oh-no sort of way -- is that this may only be a dress rehearsal for the real drama, to come at a formal European summit in late June. We also have to get through the Greek general election, scheduled for June 17. The market turmoil may not be over by a long shot.