Stocks tumbled on Friday on worries that heavy euro-zone debt loads could stymie a global recovery, while Visa and MasterCard led the financial sector lower after the U.S. Senate backed limits on card fees.
The initial optimism over moves this week to keep Greece's debt crisis from spreading ebbed on concerns the efforts won't be enough, and that plans to rein in national budgets could stifle growth.
Deutsche Bank's chief executive, who helped to craft a private-sector bailout package for Greece, said he doubted Athens could repay its debt and said a $1 trillion euro-zone rescue package would help stabilize Italy and Spain.
The jitters took the euro to an 18-month low against the dollar, while gold hit record highs.
Shares of credit card companies tumbled a day after the Senate voted to limit fees charged on credit and debit card transactions. Visa Inc shed 8 percent to $78.91, and MasterCard lost 7 percent to $215.99.
The market is taking the news out of the Senate poorly. Visa and MasterCard are getting crushed this morning. That's negative for the bank profitability picture, said Nick Kalivas, vice president of financial research & senior equity index analyst at MF Global.
The Dow Jones industrial average <.DJI> fell 121.00 points, or 1.12 percent, to 10,661.95. The Standard & Poor's 500 Index <.SPX> lost 17.11 points, or 1.48 percent, to 1,140.33. The Nasdaq Composite Index <.IXIC> dropped 41.46 points, or 1.73 percent, to 2,352.90.
A batch of positive economic data helped to pull stocks off lows. Retail sales and industrial production for April both rose, while business inventories climbed to an 8-month high in March, and consumer sentiment edged up in May as forecast.
Shares of Nvidia Corp weighed on the Nasdaq, sliding 10.4 percent to $13.13 a day after the graphics chipmaker forecast sales below estimates.
(Editing by Jeffrey Benkoe)