U.S. stocks fell on Tuesday after three days of gains when a meeting between the heads of France and Germany failed to quell fears about euro zone leaders’ ability to contain the region’s sovereign debt woes.
Efforts to stem the spreading European debt crisis have so far been ineffective, a major reason for the equity market’s declines in recent weeks. Stocks were unable to rally on Tuesday despite positive U.S. earnings and Fitch Ratings’ decision to keep the AAA credit rating for the United States.
German Chancellor Angela Merkel and French President Nicolas Sarkozy detailed plans for closer euro zone integration but they did not include boosting the size of the euro zone’s rescue fund or sales of euro bonds.
“The market wanted to see at least some forward movement, something concrete coming out of the meeting that would’ve been supportive to what’s been dragging the market lower,” said Marc Pado, U.S. market strategist at Cantor Fitzgerald in San Francisco.
Shares of financials, seen as vulnerable to a European fiscal crisis, added to their decline and were the worst-performing sector in the S&P 500. The S&P financial index was down 1.9 percent.
Merkel and Sarkozy said they would propose a tax on financial transactions, which hurt shares of exchange operators. Shares of NYSE Euronext fell 8.4 percent to $26.54, making it the worst performer in the S&P 500.
Shares of retailers Wal-Mart Stores Inc and Home Depot Inc both rose after the