Commodity-related stocks drove Wall Street lower on Wednesday as stiff declines in energy and metals prices underscored investor concerns about global economic weakness and Europe's festering debt crisis.
The down draft, which comes after three days of gains, put the S&P 500 on course for its worst quarter since the depths of the financial crisis in fourth quarter of 2008.
The S&P materials sector fell 3.7 percent as copper futures skidded nearly 7 percent and Brent crude resumed its downward trend, falling more than $2 in afternoon trade. Energy stocks fell 2 percent.
There is certainly a lot of headline risk and a lot of weak hands that hold stocks after this big rally we've had in the last three days, said Robert Francello, head of equity trading for Apex Capital, a hedge fund in San Francisco.
Cliffs Natural Resources Inc sank 8.4 percent to $55.64 while Freeport-McMoRan Copper & Gold Inc lost 6.3 percent to $32.62. Gold prices fell 1.5 percent.
In the wider market the Dow Jones industrial average dropped 83.37 points, or 0.74 percent, to 11,107.32. The Standard & Poor's 500 Index dropped 13.71 points, or 1.17 percent, to 1,161.67. The Nasdaq Composite Index dropped 32.06 points, or 1.26 percent, to 2,514.77.
The drop coincided with news early in the afternoon that bans on short-selling stocks in France, Italy and Spain have been extended, according to a European Union markets watchdog.
Investors were on edge as inspectors from the European Union and International Monetary Fund headed to Greece to scrutinize new austerity measures they must endorse for Athens to get the next installment of aid.
German Chancellor Angela Merkel suggested that parts of a planned new $148.6 billion rescue for the debt-laden country could be reopened, depending on the audit's outcome.
A push to solidify a euro zone rescue fund and alleviate the region's sovereign debt crisis lifted stocks on Tuesday for a third consecutive session, following four straight days of losses for the benchmark S&P 500. The S&P gained more than 4 percent over that three-day period.
Market direction also may be influenced by quarter-end window dressing, as portfolio managers drop underperforming stocks and buy outperformers.
Amazon.com Inc gained 3.1 percent to $231.20 after it unveiled a new tablet computer with a $199 price tag. Apple Inc, which makes the popular iPad tablet, rose 0.1 percent to $399.60.
Microsoft Corp rose 0.7 percent to $25.85 after Samsung Electronics Co Ltd unveiled software pacts with the company.
In earnings news, Jabil Circuit Inc advanced 7.8 percent to $18.74 a day after reporting fourth-quarter earnings that beat expectations, while Family Dollar Stores Inc was flat at $54.16 after its results.
In economic news, orders for long-lasting U.S. manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending suggested the economy would avoid another recession.
(Reporting by Ryan Vlastelica; Editing by Chizu Nomiyama)