U.S. stocks fell on Wednesday with traders focused on a sliding euro and rising Italian bond yields as market anxiety over Europe persisted.
Italy paid a euro-era record high yield of 6.47 percent to sell five-year notes in its first auction of longer-term debt since the European Union moved toward greater fiscal integration.
U.S. stocks have been weighed down this week in part on fears an agreement at last week's EU summit did not go far enough to resolve the two-year-old debt crisis.
The S&P energy sector <.GSPE> fell 1.8 percent as U.S. crude oil prices dropped 3.1 percent. Commodity-related shares were further pressured by a strengthening U.S. dollar.
Copper fell for a third straight session, while gold hit a two-month low and the euro dipped below what some view as a psychological barrier of $1.30.
It's clear at this point the EU has not done enough, the market doesn't feel it's done enough, said Doreen Mogavero, chief executive of Mogavero, Lee & Co from the floor of the New York Stock Exchange.
There is this negative feeling about where the economy is going into the next year, Mogavero said.
The Dow Jones industrial average <.DJI> lost 64.45 points, or 0.54 percent, to 11,890.49. The S&P 500 <.INX> dropped 8.71 points, or 0.71 percent, to 1,217.02. The Nasdaq Composite <.IXIC> fell 23.50 points, or 0.91 percent, to 2,555.77.
Investors were also disappointed the U.S. Federal Reserve gave no hints after its Tuesday meeting about new stimulus measures to offset the effects of the European crisis.
Even if a majority of economists polled by Reuters expect no further action from the Fed to boost the economy in the short term, a separate survey showed most primary dealers see the central bank enacting some type of stimulus.
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The euro slid to an 11-month low against the dollar as investors speculated the ratings of more euro zone countries may be downgraded in the near term, given that a quick solution to the crisis remains elusive.
An index of home builder stocks <.DJUSHB> dropped 1.3 percent after the National Association of Realtors said data on sales of previously owned homes will be revised downward because of double counting.
(Reporting by Rodrigo Campos; Editing by Jeffrey Benkoe and Jan Paschal)