U.S. stocks fell on Tuesday after data showed producer prices rose more than expected, igniting fears of inflationary pressures.

The Labor Department said the producer price index rose 1.8 percent in November, much more than the forecast for an 0.8 percent rise.

Investors worried that rising prices would prompt the Federal Reserve to revise its low-interest-rate policy, which has been partly responsible of increased risk-taking.

Inflation and core inflation came in hotter than forecast, so the Fed may not be able to say they're going to stay accommodative 'for the foreseeable future', said Stephen Wood, chief market strategist at Russell Investments in New York.

The Fed will kick off a two-day policy-setting meeting later on Tuesday, with a statement on the economy expected on Wednesday.

The Dow Jones industrial average <.DJI> fell 19.65 points, or 0.19 percent, to 10,481.40. The Standard & Poor's 500 Index <.SPX> dropped 3.47 points, or 0.31 percent, to 1,110.64. The Nasdaq Composite Index <.IXIC> lost 5.19 points, or 0.23 percent, to 2,206.91.

Also, a gauge of manufacturing activity in New York state unexpectedly plunged in December, while capacity utilization edged up to 71.3 percent, above forecasts.

Wells Fargo & Co shares rose 2 percent to $25.99 after it sold $10.65 billion in stock, raising funds to help repay a U.S. government bailout.

The U.S. dollar strengthened against the euro and the dollar index <.DXY> rose 0.7 percent to its highest level since early October.

(Editing by Jeffrey Benkoe)