Stocks pulled back sharply Wednesday, erasing most of the previous session's big gains as investors grew concerned about high commodities...

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NEW YORK — Stocks pulled back sharply Wednesday, erasing most of the previous session’s big gains as investors grew concerned about high commodities prices and the possibility that banks remain vulnerable to further problems from soured debt.

The Dow Jones industrial average fell 293.00, or 2.4 percent, to 12,099.66 after climbing 420 points, or 3.5 percent, on Tuesday.

Microsoft, one of the 30 Dow stocks, declined 80 cents Wednesday to close at $28.62. Boeing, also a Dow stock, plunged $3.08 to $73.45.

Broader stock indicators also declined.

The Standard & Poor’s 500 index fell 32.32, or 2.4 percent, to 1,298.42, and the Nasdaq composite index fell 58.30, or 2.6 percent, to 2,209.96.

Some retrenchment was to be expected after the huge advance. But the decline also reflects continuing uneasiness about the world’s financial system and the U.S. economy.

Talk swirled about whether further write-downs are in the offing after Merrill Lynch sued a company involved in a debt transaction with it, according to several reports. Merrill was among the steepest decliners of the financial stocks.

News that the government plans to free up billions of dollars at Fannie Mae and Freddie Mac, a move that could help struggling homeowners, helped quell some of the market’s fears for a time. But it couldn’t stave off late selling by investors who have seen big advances evaporate many times during the credit crisis and decided to preserve some of their gains.

George Shipp, chief investment officer at Scott & Stringfellow, said some investors are still uneasy about the health of the markets. He said back-and-forth days will likely continue as Wall Street tries to feel its way forward.

“Nobody wants to make the first move. There is liquidity on the sidelines. It doesn’t really know what to do right now,” Shipp said.

“Clearly there is fear. I would say the needle is pointing more toward fear than greed right now,” he said.