Wall Street continued its slide even after American retail sales rose more than expected as the data fuelled talk that the US Federal Reserve will soon begin to taper its monthly bond-buying programme.
Just days away from the next Federal Open Market Committee meeting on Dec. 17 and 18, US consumers appear more confident than forecast. Retail sales climbed 0.7 percent in November, following a 0.6 percent gain in October, according to Commerce Department data.
Last month's increase was the biggest in five months and larger than the 0.6 percent rise called for in separate polls by Bloomberg News and Reuters.
In afternoon trading in New York, the Dow Jones Industrial Average declined 0.74 percent, the Standard & Poor's 500 Index lost 0.48 percent, while the Nasdaq Composite Index fell 0.20 percent. Declines in shares of Procter & Gamble, last 2.2 percent weaker, and shares of Johnson & Johnson, last 2 percent lower, led losses in the Dow.
"Although we know the Fed is going to taper eventually, the unknown factor is by how much or the impact on interest rates, etc.," Tim Ghriskey, chief investment officer at Solaris Asset Management in Bedford Hills in New York, told Reuters. "There is short-term fear that all this will come out at the meeting next week."
US Treasuries also fell, pushing yields on five-year, 10-year and 30-year bonds higher, while commodities gold and silver declined as well.
"We've had a lot of pretty good economic news lately and in the face of that data we're seeing the market starting to digest the exuberance it has had in 2013," Randy Bateman, who oversees US$15 billion as chief investment officer of Huntington Asset Advisors in Columbus, Ohio, told Bloomberg News. "A lot of it might be in anticipation of the FOMC announcement next week and whether this good economic news is enough for the Fed to start its tapering process."
Even so, the number of claims for jobless benefits climbed by 68,000 in the week ended Dec. 7 to 368,000, the highest level in two months, a Labor Department report showed.
Shares of Lululemon Athletica sank, last 11 percent weaker, after the company forecast fourth-quarter profit that fell short of analysts' estimates.
Shares of Facebook jumped, last up 3.6 percent, after S&P Dow Jones Indices said the stock will join the S&P 500 next week.
In Europe, the Stoxx 600 Index finished the session with a 1 percent decline from the previous close, falling for the third straight day. France's CAC 40 slid 0.4 percent, while Germany's DAX gave up 0.7 percent, and the UK's FTSE 100 retreated 1 percent.
Euro-area industrial production unexpectedly contracted, shrinking 1.1 percent in October, according to European Union's statistics office data. It was the second straight month of declines.
"All in all, today's industrial production figures clearly highlight the bumpy and fragile nature of the euro zone's economic recovery," Martin van Vliet, an economist at ING, told Reuters. "With euro zone growth seemingly stuck in low gear disinflationary pressures will persist, thereby keeping the possibility of further [European Central Bank] action very much alive."