Wall Street stocks fell on Monday as euro zone data signaled the region could be facing a recession, adding to worries about Europe's debt crisis.

Initial optimism about prospects of pro-growth reforms under new governments in Italy and Greece gave way to caution over the huge debt problems still plaguing the euro, which fell against the U.S. dollar.

Stocks have traded in tandem with the euro recently in a sign U.S. investors are taking cues from the euro zone's mushrooming debt crisis. Bouts of risk aversion have been followed by periods of relative optimism.

If you look at the reaction to events, that effect is waning, but nevertheless there is lingering effect, and there may be a little more time before ... those events move to the rearview mirror, said Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston.

Industrial production in the euro zone fell in September, the most since early 2009, adding to fears of a sharp contraction by industry and a probable recession. Output at factories in the 17-nation group fell 2.0 percent for the month.

Financials led the decline on the S&P 500, with the S&P financial index down 2.3 percent. Bank of America shares were down 2.6 percent at $6.05.

The Dow Jones industrial average was down 98.84 points, or 0.81 percent, at 12,054.84. The Standard & Poor's 500 Index was down 13.85 points, or 1.10 percent, at 1,250.00. The Nasdaq Composite Index was down 21.92 points, or 0.82 percent, at 2,656.83.

Limiting losses on the Dow, Boeing Co shares rose 1.7 percent to $68.05 after the U.S. planemaker announced an order worth at least $18 billion and said the Middle East will need to recruit and train tens of thousands of new pilots to sustain a massive expansion in long-haul fleets.

Berkshire Hathaway's Warren Buffett said he has bought nearly $11 billion of International Business Machines Corp stock in the past eight months. IBM shares, which jumped nearly 1 percent earlier, slipped 0.1 percent at $187.25.

(Reporting by Caroline Valetkevitch, Editing by Kenneth Barry)