U.S. stocks fell in New York, failing to rebound from consecutive triple-digit losses on the Dow and extending the worst quarterly slump since 2002, as J.C. Penney Co. forecast weaker sales and concerns that further write downs may destabilize banks' access to capital.

The Dow Jones Industrial Average dropped 86.06 points, or 0.70 percent to 12216.40, the Standard & Poor's 500 index tumbled 10.54 points, or 0.80 percent to 1315.22 and the Nasdaq Composite Index declined 19.65 points, or 0.86 percent, to 2261.18.

Stocks closed the day near the lowest levels of the session as the market lacked a clear positive catalyst providing a reason to buy stocks.

The Commerce Department said consumer spending increased by a shabby 0.1 percent in February, making it the worst performance in 17 months. Meanwhile, the government said personal income increased by 0.5 percent in February, a positive sign given the weakness in the job market.

J.C. Penney, the third-largest U.S. department store , dropped to a two-month low after reporting consumer spending had slowed which will hurt first-quarter earnings.

Citigroup Inc. tumbled on a prediction by Oppenheimer & Co.'s Meredith Whitney that the biggest U.S. bank lacked sufficient cash to maintain its $1.28 annual dividend.

J.C. Penny closed down $3.04 at $37.48. Citigroup lost 96 cents to close at $20.83.

World Markets

Markets closed in Europe with modest losses. The Dow Jones Euro Stoxx 50, a index tracking the 50 largest companies of Europe, lost 11.06 points, or 0.30 percent, to 3641.05. London's benchmark index, the FTSE 100 declined 24.60 points, or 0.43%, to 5692.90.

Asian markets showed stronger gains. Japan's Nikkei 225 Index rose 215.89 points, or 1.71 percent, to 12820.47. Hong Kong's Hang Seng Index gained 621.73, or 2.74 percent, to 23285.95.

France's CAC 40 Index fell 23.61 points, or 0.50 percent, to 4695.92 and Germany's DAX dropped 18.16, or 0.28 percent, to 6559.90.