Stocks on both sides of the Atlantic fell amid further signs of economic struggle in Japan and Europe and as hopes for an immediate boost from the US Federal Reserve fade.
Data showed retail sales in Japan posted a larger-than-expected drop in July from a year earlier, while economic confidence in the euro zone decreased more than forecast.
The latest US reports, while not as dire, were mixed again. Consumer spending increased 0.4 per cent in July, Commerce Department figures showed. Claims for jobless benefits were steady last week.
"The improvement in spending activity suggests that overall economic activity may be off to a fairly decent start in the third quarter," Millan Mulraine, senior macro strategist at TD Securities in New York, told Reuters.
In late afternoon trading in New York, the Dow Jones Industrial Average fell 0.67 per cent, the Standard & Poor's 500 Index shed 0.71 per cent and the Nasdaq Composite Index declined 0.93 per cent.