U.S. stocks remain lower, but are off their worst levels from early in the day.
The Dow is down 82 points, the S&P 500 is down 9 points, and the Nasdaq is down 27 points.
The U.S. market took its lead from Europe, which saw markets fall after troubling news from the Portuguese banking sector and worse than expected economic data.
In Portugal, the parent company of its second-largest bank, Banco Espirito Santo, missed debt payments to "a few clients," sending shares of Banco Espirito and the Portuguese market tumbling.
Also in the European periphery, Spanish bank Banco Popular Espanol postponed a debt sale due to adverse market conditions.
In France, industrial production fell 3.7% in May, worse than the 1% decline that was expected. Consumer prices in France also climbed just 0.5% in June, as the specter of deflation now looms over the French economy.
Industrial production in Italy also stumbled, with production falling 1.2% in May.
In U.S. corporate news, Family Dollar reported third quarter earnings that missed expectations, as comparable store sales fell 1.8% during the quarter. Shares opened lower but were unchanged in afternoon trade.
Shares of sandwich chain Potbelly are getting crushed, down nearly 25%, after the company last night reported preliminary earnings that disappointed. Potbelly expects same-store sales to fall 1.6% during the second quarter.
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