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Wall Street tumbles, hovers near bear market territory

U.S. stock prices fell sharply again Tuesday in choppy trading, amid ongoing fears about the possibility that Greece may soon default on its debt.

The Dow Jones industrial average was lately down over 130 points. Europeans shares also extend their recent losses amid fears the euro zone’s sovereign debt crisis is spreading to the banking sector.

U.S. stocks have fallen for the past two sessions. CNBC reports that the broader stock market is now trading near bear market territory -- down 20 percent from its April high -- as investors worry that the crisis in Europe could make a recession more likely in the United States. Fears about Europe drove the Dow down some 260 points Monday.

“The economy is in a protracted slowdown, and until there’s a resolution with Greece, that situation will continue to linger over the market,” Robert Pavlik, chief market strategist at Banyan Partners LLC in New York, Reuters reported. “This could turn into a self-fulfilling prophecy of recession.”

European finance ministers are looking at making banks take bigger losses on Greek debt, and they have delayed a vital aid payment to Athens until mid-November, setting up a crunch point in the region's sovereign debt crisis, according to the news wire.

Adding to the gloom: Goldman Sachs has cut its outlook for gross domestic product for advanced economies for 2012, seeing growth of 1.3 percent instead of its previous expectation of 2.1 percent.

In economic news, Federal Reserve Chairman Ben Bernanke told lawmakers Tuesday that recent economic indicators point to “the likelihood of more sluggish job growth” ahead. And data on factory orders showed a second decline in three months in August.