Stocks fell on Wednesday with investors on edge ahead of a summit to hammer out a plan to combat the Eurozone debt crisis and finding few reasons to continue buying after two days of gains.

A senior German government official, briefing reporters on condition of anonymity, said Berlin is increasingly pessimistic about the chances of a deal, accusing some governments of failing to grasp the gravity of the situation.

You have an investment community that's sitting on a hair trigger, and on the surface these headlines are disturbing, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. Any reticence on the part of Germany is going to be viewed as a setback.

The Dow Jones industrial average dropped 49.35 points, or 0.41 percent, at 12,100.78. The Standard & Poor's 500 Index was down 8.56 points, or 0.68 percent, at 1,249.91. The Nasdaq Composite Index slid 27.38 points, or 1.03 percent, at 2,622.18. The debt crisis has pressured equities in recent weeks on halting progress in finding a resolution, though the S&P has risen almost nine percent since a closing low reached on Nov. 25 on hopes of a deal.

French officials have said that French and German leaders won't leave the summit until a powerful deal was reached. Officials want to impose mandatory penalties on nations that exceed deficit targets, a plan backed by U.S. Treasury Secretary Timothy Geithner, who's on a trip to Europe.

Also hurting sentiment. China's annual rate of export growth slowed in November versus October. Investors are worried slowing growth in China will hurt the U.S. recovery.

Martha Stewart Living Omnimedia Inc. jumped 8.2 percent to $4 after J.C. Penney Co. Inc. agreed to buy a 16.6 percent stake.

Alpha Natural Resources Inc. will pay $1.5 million to each of the families of 29 miners killed in a West Virginia mine explosion last year. The stock fell 2.2 percent to $24.36.

Equities rose for a second day on Tuesday on hopes European leaders would take strong steps to end the debt crisis.

(Reporting by Ryan Vlastelica; editing by Jeffrey Benkoe)