Investing.com - U.S. stocks closed sharply lower Tuesday, despite positive U.S. housing data and upbeat comments by Germany's Finance Minister Wolfgang Schauble, as investors are fearful that global stimulus may not be enough to boost growth.
U.S. trade, the Dow Jones Industrial Average fell 0.75%, the S&P 500 index plunged 1.05%, while the Nasdaq Composite index collapsed 1.36%.
Launching the sell off, Federal Reserve Bank of Philadelphia President Charles Plosser stated that the Central Bank’s QE 3 efforts will likely not be sufficient to boost growth.
Standard & Poor’s said that S&P/CS House Price Index rose to a seasonally adjusted annual rate of 1.2%, from 0.5% in the preceding quarter.
Analysts had expected S&P/CS House Price Index to rise 1.0% in the last quarter.
Meanwhile, speaking during a visit to Helsinki, Mr. Schauble said European policymakers should do everything in their power to protect the single currency and said defending the euro was "worth any effort".
But investors remained cautious amid German media reports that lawyers for the German central bank are examining the legality of the European Central Bank's bond purchasing program, setting the stage for a possible legal challenge.
Financial stocks were broadly higher, led by Bank of America, up 0.88%, and followed by Citigroup, with shares climbing 0.81%, while Goldman Sachs and JP Morgan added 0.62% and 0.07% respectively.
Energy stocks also added to gains, with shares in Exxon Mobil rising 0.33% and Chevron adding 0.17%
On the downside, software company Red Hat tumbled 1.82% after it announced a lower-than-expected adjusted profit due to rising costs, and lowered the top end of its full-year revenue outlook on slow growth in its services business.
Facebook slipped 0.29%, after dropping over 9% on Monday amid reports that a number of users, mostly in France, complained that private messages sent between 2007-2009 were suddenly public.
The social media giant denied the reports however, saying that the messages were older wall posts that had always been visible on the users' profile pages.
Elsewhere, Caterpillar plunged 2.28% as it cut its 2015 profit outlook, warning that weaker commodity prices would result in a bigger-than-expected fall-off in demand.
At the close of European trade, the EURO STOXX 50 advanced 0.41%, France’s CAC 40 added 0.47%, while Germany’s DAX 30 climbed 0.16%.
Investors are awaiting new home sales from the U.S.A. on Wednesday.