All through January, stocks have surged and sent the Dow Jones Industrial Average (DJINDICES:^DJI) roaring toward record highs -- but don't look now, because the market's fortunes have taken a turn for the worse today. The index has dropped a glaring 120 points, or around 0.8%, as of 2:15 p.m. EST, pushed down by fresh concerns from Europe and a trio of Dow member downgrades. Nearly every stock on the index is currently in the red, with many suffering losses of more than 1%.

Europe, downgrades take a bite out of the Dow
Europe took the first crack at the markets today, with Spanish and Italian bond yields rising dramatically on bad news from the two debt-plagued countries. Spanish Prime Minister Mariano Rajoy, who has struggled to contain his country's spiraling unemployment problem, strongly denied accusations of corruption that sprung up over the weekend. In Italy, prosecutors have launched a probe of banks just as Silvio Berlusconi -- the former prime minister who is once again a candidate in elections -- vowed to cut taxes if elected. Markets didn't like any of this news, and with disappointing numbers today showing that new manufactured-goods orders in the U.S. rose less than expected in December, economic woes have investors reeling.

It's not just the economy at large, however; individual stocks on the Dow haven't been able to find any footing today, and downgrades have hit hard.

Wal-Mart (NYSE:WMT) has fallen 1.2% following a downgrade from analysts at JPMorgan, who cut the stock's recommendation from "outperform" to "neutral." The analysts cited the expiration of the payroll tax cut -- part of the fiscal-cliff deal -- as potentially stymying Wal-Mart's sales growth. While the retailer comes off of its 52-week highs, the fears are justified: During the height of the recession, reduced spending power among many consumers hit Wal-Mart sales hard, although the company has boosted sales at a quick clip since then.

More companies are feeling the downgrade pain today, though: Oil giant Chevron (NYSE:CVX) has also fallen, with shares down 0.9% following a downgrade from "buy" to "neutral" courtesy of UBS analysts, who cited it as a value call. Chevron and fellow Dow oil giant Exxon-Mobil, which is also struggling today, could certainly benefit from the recent spike in gas prices. And while the two stocks have flirted with 52-week highs recently, these two companies are enjoying the afterglow of strong full-year 2012 earnings.

Shares of pharmaceutical giant Merck (NYSE:MRK) have taken the biggest hit of any downgraded company today, with the stock falling around 2%. Leerink Swann downgraded Merck from "outperform" to "market perform," citing a lack of near-term catalysts. Merck has indeed struggled with patent expirations on its best-selling drug Singulair recently, although the company still performed quite well through 2012. However, Merck did project profit to fall in 2013 as generic drugs continue to eat at sales of products that have lost patent protection, and the company's decision to delay filing for U.S. approval for its potential osteoporosis therapy odanacatib until 2014 hasn't helped investor sentiment.