S&P 500 Index close down 13.41 points, or 1.21 percent, to 1,094.60. The Dow Jones Industrial Average fell 100.97 points, or 0.97 percent, to 10,282.41.
The basic materials and energy sector lead the market in declines as investors shy away from commodities.
The Dow Jones U.S. Basic Materials Index fell 2.33 percent and the Dow Jones U.S. Oil & Gas Index fell 1.59 percent.
Global investor confidence was first jolted when France reported that consumer spending in January fell 2.7 percent from December while economists polled by Bloomberg expected a decrease of only 1.1 percent.
About an hour later, at 4:00 am EST, Germany released its Ifo Business Climate Index, which failed to show an increase for the first time in 10 months. In particular, the reported conditions for retailers deteriorated considerably.
Bank of England governor Mervyn King, in a statement, also cautioned that the global recovery is fragile and the economic tensions resulting from imbalances between high-savings countries and low-savings countries show little signs of resolving.
Against the dollar, higher yielding currencies made their initial declines for Tuesday around this time. Similarly, NYMEX March oil futures dropped over 2 percent from 3:00 am EST to 7:00 am EST.
The second drop in global assets occurred when the U.S. released worse than expected consumer confidence data and the Present Situation Index was its lowest reading in 27 years.
This particularly affected the U.S. stock market as the Dow was trading positive for the day before this announcement.
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