Stocks fell for a second day on Wednesday as investors contemplated a world without monetary stimulus and a poorly received bond auction in Spain suggested the effects of Europe's funding operations were waning.

Selling was broad as indexes tracking nine of the 10 S&P 500 sectors ended lower, with financial, materials and technology shares the worst performers. The S&P's financial index fell 1.6 percent. Shares of Morgan Stanley, often sensitive to concerns over Europe, dropped 3.5 percent to $18.69.

The benchmark S&P 500 index has fallen in eight of the past 12 sessions, dropping below its 14-day moving average for the first time in a month. The Nasdaq posted its worst daily percentage drop since December 14.

The major support for the economy and for the financial markets over the past two years has been stimulus, and without it, it's still a question whether these economies can make it on their own, said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

Spanish borrowing costs jumped at bond auctions, raising concerns that the rally in troubled peripheral sovereign debt sparked by the European Central Bank's two Long-Term Refinancing Operations may be coming to an end.

Equity markets have rallied steadily since the ECB's stimulus efforts eased funding pressures for euro-zone banks, removing a source of anxiety for U.S. investors.

Stocks continued to feel the fallout from minutes from the Federal Reserve's latest meeting, published on Tuesday. They showed the Fed's policy-setting Federal Open Market Committee was moving away from introducing more monetary stimulus.

The Dow Jones industrial average fell 124.80 points, or 0.95 percent, at 13,074.75. The Standard & Poor's 500 Index lost 14.42 points, or 1.02 percent, at 1,398.96. The Nasdaq Composite Index dropped 45.48 points, or 1.46 percent, at 3,068.09.

Signs that the U.S. economy was on the mend in the first quarter have helped markets rally this year. But there is now a growing feeling among investors that a least some of that improvement may have been due to the mild winter. After the S&P 500's near 30-percent run since early October, investors are turning cautious ahead of second-quarter economic data.

The economy now has to prove itself. Were those numbers we saw in the first quarter due to weather conditions or were they real? It's going to take five or six weeks to sort this out, said Bittles.

Commodities, a hedge against the inflationary and dollar-weakening effects of monetary stimulus, dropped sharply. Copper fell more than 3 percent, its most in nearly two months. Gold fell to its lowest in nearly three months.

That hurt the S&P's materials sector, down 1.4 percent. The ARCA Gold Bugs index, which tracks 16 gold miners traded in New York, fell 4.3 percent.

Private-sector jobs data, released by payrolls processor ADP, showed U.S. employers added 209,000 jobs in March, suggesting the labor market was continuing to strengthen, but it was not enough to boost investor sentiment.

Some investors caution about reading too much into the weakness, saying that the market needs a reason to consolidate after its big run and that the fundamental picture, while not inspiring, is at least solid.

That was shown in the CBOE Volatility Index, Wall Street's fear gauge, which could not sustain its gains after it moved above resistance at its 50-day moving average. The index hit a high of 17.74, its highest in nearly a month, before retreating.

It appears that the VIX will not sustain this breakout. Thus the market may not be ready for a significant drop at this time, said Stifel Nicolaus options market strategist Elliot Spar.

Moody's downgraded the ratings of conglomerate General Electric Co and its finance unit, GE Capital, each by a notch, saying there were material risks associated with GE Capital's funding model. The stock, a Dow component, fell 1.1 percent to $19.74.

McDonald's Corp lost 1.9 percent to $97.48 after Goldman Sachs removed it from Goldman's conviction buy list and cut its price target on shares of the world's largest fast-food restaurant chain to $110.

Semiconductors weighed on the Nasdaq as SanDisk Corp dropped 11.1 percent to $44.51 after the flash-memory maker warned that its revenue and margins are hurting from weak demand from mobile phone manufacturers as well as from a glut in supply that has led to lower prices.

The PHLX semiconductor index lost 2.2 percent.

Volume was light, with about 6.82 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.

(Additional reporting by Doris Frankel; Editing by Padraic Cassidy)