U.S. stocks fell on Tuesday after three days of gains as weak German growth data renewed concerns about the euro zone debt crisis and the global economy.
The market is expected to be volatile Wednesday after a meeting between French and German leaders late Tuesday failed to make significant progress on the euro zone sovereign debt crisis.
World stock markets slipped on Wednesday, on growing concerns that French and German plans for closer fiscal integration fell short of expectations.
German Chancellor Angela Merkel and French President Nicolas Sarkozy have failed to calm financial market worries over the euro zone debt crisis. The pair held a crisis meeting yesterday and unveiled a plan for closer euro zone integration, but stopped short of raising the region's rescue fund and rejected the idea of a common euro bond.
Sarkozy and Merkel also proposed taxing financial transactions. In plans to be sent to European Council President Herman Van Rompuy today, the two leaders want a president to be elected to represent the euro zone and twice yearly meetings of the leaders of the embattled 17 nation bloc.
Rejection of the plan indicates that investors remain concerned that French and German plans for closer fiscal integration may be insufficient to stop the regional debt crisis from spreading further with Spain and Italy both under fiscal pressure.
Support for a common bond had been growing as it is increasingly seen as a way to allow highly indebted euro zone countries to regain access to commercial markets while providing investors a safeguard through joint liability. Under heavy pressure to restore confidence in the euro zone following a dramatic market slump, Sarkozy and Merkel vowed to stand side by side in defending the euro, but their lack of decisive action leaves the currency area vulnerable to more attacks from traders.
On Tuesday, Dow Jones Industrial Average ended lower by 76.97 points, or 0.7 percent, at 11,405.93. The Nasdaq ended lower by 31.75 points. or 1.2 percent, at 2,523.45. The Standard & Poor's 500 ended lower by 11.7 points, or 0.97 percent, at 1,192.76.
Nine out of ten economic sectors ended lower, led by financial, industrial, energy and materials sectors. Consumer staples were the only sector to end higher. Twenty-six out of thirty Dow components ended lower, led by Bank of America. Wal-Mart and Home Depot were in the winner's column following their positive earning reports on Tuesday.
Stocks were pressured since the very start amid news that during the second quarter Germany's economy grew at a paltry 0.1 percent and that broad euro-zone GDP grew just 0.2 percent. The relatively dour data was released ahead of a press conference between German Chancellor Merkel and French President Sarkozy.