Stocks fell on Wednesday on fears about the French banking sector's exposure to shaky European debt and its possible spillover onto U.S. banks.

Trading appeared to be driven again by momentum. For a fifth straight day, the Dow industrials shifted by more than 400 points from the session high to the day's low.

U.S. financial stocks led the slide on worries that any French bank problems could spread to them. An index of European bank shares dropped 6.7 percent and the KBW index of U.S. bank stocks slid 4.9 percent. Bank of America Corp was down 6.6 percent at $7.10.

Wednesday's drop comes a day after stocks rallied on the Federal Reserve's pledge to keep interest rates near zero for at least two more years.

"The sense that you're going to have a continuing accommodative policy from the Fed gave people some comfort, but concern out of the European debt situation turned things down," said Eric Kuby, chief investment officer of North Star Investment Management Corp in Chicago.

"What you're seeing is a very short-term, direction- oriented market. Seems to me, trading firms are trying to beat the other firms to the next print, and it's really exacerbating these moves."

The Dow Jones industrial average lost 280.22 points, or 2.49 percent, to 10,959.55. The Standard & Poor's 500 fell 22.64 points, or 1.93 percent, to 1,149.89. The Nasdaq Composite dropped 39.33 points, or 1.58 percent, to 2,443.19.

French lender Societe Generale said it asked France's stock market regulator to open an investigation into the source of rumors about its financial health, which initially triggered the financial stocks' sell-off. SocGen shares tumbled 14.7 percent, while BNP Paribas dropped 9.5 percent.

In earnings-related company news, Dow component Walt Disney Co dropped 8,1 percent to $31.88 a day after the entertainment company's quarterly results failed to reassure investors that it could do well in a weak U.S. economy.

Even after Tuesday's snap-back rally, the S&P 500 is down more than 15 percent from its 2011 closing high set on April 29. Worries about the U.S. economy and high levels of public debt in Europe have sent stocks cascading down sharply over the last two weeks.