Stocks on Wall Street fell sharply on Thursday as investors were skeptical that the latest European Union summit would agree on concrete measures to tackle the region's debt crisis. The drop moderated somewhat after the Supreme Court largely allowed President Obama's 2010 health care overhaul to stand. But the respite was brief. By late morning, the Dow Jones industrial average was down 1.3 percent, or about 160 points. The Standard & Poor's 500-stock index lost 1.3 percent and the Nasdaq composite index slumped 1.6 percent. Financial shares were in focus, with JPMorgan losing ground on a report that recent trading losses could reach $9 billion and with Barclays stock down 12 percent in the aftermath of a probe into the manipulation of interbank lending rates. European Union leaders started a two-day meeting more openly divided than at any time since the euro crisis began, with Angela Merkel, chancellor of Germany, showing no sign of relenting in her refusal to back other countries" debts. Spanish benchmark 10-year yields hovered near the 7 percent level that recently forced other highly indebted countries to seek bailouts. Markets have been worrying that Spain, the euro zone's fourth-largest economy, will have to ask for financial help in excess of the 100 billion euros already approved for Madrid to bail out its banks. European markets were down. The Euro Stoxx 50, a blue-chip euro zone indicator, fell 1 percent in afternoon trading. The DAX in Germany lost 1.9 percent and the FTSE 100 in London fell 1.5 percent. Data showed fewer Americans filing new claims for unemployment benefits last week, but the number remained too high to signal any major improvement in the labor market. "There are no surprises here," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York. This is a lackluster economy and I'm worried about what the June payroll will look like, but people are right now focused on health care and Europe. Wall Street-traded shares of the British bank Barclays tumbled 12.2 percent a day after an investigation found it had manipulated interbank lending rates over several years, in a probe that could cost the financial industry billions of dollars. Commodity prices fell as the United States dollar strengthened against the euro, possibly hurting prices of stocks in the materials and energy sectors.