U.S. stocks fell, with the S&P 500 and Nasdaq off 2 percent or more 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 to stem the euro-zone debt crisis 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 had helped to craft a private-sector bailout package for Greece, said he doubted Athens could repay its debt, adding that a new $1 trillion euro-zone rescue would help stabilize Italy and Spain.
The euro fell to an 18-month low against the dollar and global shares dropped sharply while gold hit record highs. But when gold failed to break through $1,250 an ounce, it sold off with stocks and hit a session low.
The bailout soothed our nerves for a few days, but now we've peeked under the Band-Aid and we're not sure the wound is healing, said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California.
The fear is that this could turn into a broader sovereign debt crisis that could impact us over here.
The Dow Jones industrial average <.DJI> was down 181.99 points, or 1.69 percent, at 10,600.96. The Standard & Poor's 500 Index <.SPX> was down 23.22 points, or 2.01 percent, at 1,133.22. The Nasdaq Composite Index <.IXIC> was down 55.20 points, or 2.31 percent, at 2,339.16.
Shares of credit card and other financial companies slumped a day after the Senate voted to limit fees charged on credit and debit card transactions. The S&P financial index <.GSPF> shed 2.8 percent, while Visa Inc dropped 10 percent to $77.20 and MasterCard sank 8.3 percent to $213.06.
Waddell & Reed Financial Inc tumbled 5.8 percent to $32.07 after a document obtained by Reuters showed that the company was a big mystery seller of futures contracts during the market meltdown last week.
Shares of Nvidia Corp weighed on the Nasdaq, sliding 13 percent to $12.75 a day after the graphics chipmaker forecast sales below estimates.
Also on the earnings front, both J.C. Penney Co Inc and Dillard's Inc reported quarterly results. JC Penney shares dropped 2.3 percent to $27.52 on a weak outlook. In contrast, Dillard's stock shot up 11.6 percent to $28.69 as profit topped estimates.
Energy companies' shares fell, with the S&P energy index <.GSPE> off 2.3 percent as crude futures prices fell to a three-month low on swollen U.S. crude inventories and concerns about Europe.
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 eight-month high in March, and consumer sentiment edged up in May as forecast.
(Editing by Jan Paschal)