The Dow Jones Industrial Average dropped 130 points following other major markets that fell over political uncertainty in Europe.
On Monday, leading markets closed down by around a percent each amid concerns over the worsening political situation in Spain and Italy.
The Dow Jones hit 14,000 on Friday, but the gains lasted only one trading day, and it opened down by 87 points on Monday and fell further to close at 13,880.
The three major US stock indices were hit harder with the Standard & Poor’s 500 index recording a loss of 1.2 percent and closing at 1,495, and the NASDAQ falling 1.5 percent and ending the day at 3,131.
Markets of the eurozone’s leading economies, Germany’s DAX and France’s CAC, fell 2.5 percent and 3 percent respectively. The UK’s FTSE 100 dropped 1.6 percent.
The major losers in Western Europe were from Spain and Italy, with Spain’s IBEX down nearly 3.8 percent and Italy’s Milan-based exchange, Borsa Italiana, falling 4.5 percent.
The market downshift came as the Spanish premier fends off accusations of stashing secret payments from businesses and the political battle for the next Italian prime minister becomes less of a certainty.
The market uncertainty has consequently affected the value of the euro, which fell 0.7 percent against the US dollar and now stands at $1.353.