Stocks fell on Tuesday on continued worries that measures to deal with Europe's debt problems will hinder global economic growth.
The broad market was also pressured by uncertainty about tighter regulation. The U.S. Securities and Exchange Commission and financial exchanges are expected to propose new rules to curb trading when markets plunge uncontrollably.
Adding to the negative tone, the German government plans to ban naked short selling from midnight in the country's 10 most important financial institutions. Naked short selling occurs when an investor sells shares without borrowing them first.
Shares of technology companies, which tend to rely heavily on overseas sales, were among the biggest losers. An index of semiconductor shares <.SOXX> lost 2.6 percent, while Intel Corp shares dropped 2.6 percent to $21.44.
It's a one-two punch. First is continuing concern
over the euro and continuing concern over the viability of the (European) Union, and then second is rotation out of large-cap tech, said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey.
The Dow Jones industrial average <.DJI> fell 114.73 points, or 1.08 percent, to 10,511.10. The Standard & Poor's 500 Index <.SPX> lost 17.64 points, or 1.55 percent, to 1,119.30. The Nasdaq Composite Index <.IXIC> gave up 42.84 points, or 1.82 percent, at 2,311.39.
Key senators reached a compromise on the balance of power between state and federal officials on bank oversight, aides said, a move that could clear away a long-standing obstacle to passage of a landmark Wall Street reform bill in the U.S. Senate.
The S&P financial index <.GSPF> fell 2.8 percent, with JPMorgan Chase & Co down 2.2 percent at $38.97.
Stocks had opened higher as a meeting of euro-zone finance ministers in Brussels to iron out wrinkles in a 750 billion euro rescue plan helped to curb fears that the region's debt crisis could spread.
But the euro quickly resumed its downward move as investors fretted over what deep government spending cuts will mean for the fragile economic recovery. The euro skidded to a fresh four-year low against the U.S. dollar.
(Additional reporting by Caroline Valetkevitch; Editing by Kenneth Barry)