US stocks fell on Tuesday as rising inflation in China led investors to expect further tightening in that country, prompting worries over the potential impact on demand for companies reliant on global growth such as Alcoa, 3M and Caterpillar. Questions over the European Union's bailout plan also weighed on investors.
The Dow Jones Industrial Average declined 36.88 points (0.34%) to 10,748.26, its fifth decline in the last six sessions. Alcoa led the measure's decline with a drop of 46 cents (3.7%) to $12.13. Meanwhile, 3M dropped 93 cents (1.1%) to $85.04, and Caterpillar slipped 62 cents (0.9%) to $66.07.
Merck was also particularly weak with a decline of 74 cents (2.2%) to $33.51, after the drug developer said it has ended development of its first stab at a follow-on biologic drug.
Walt Disney was the measure's best performer, up 47 cents (1.3%) to $35.76, as investors grew hopeful for the company's quarterly results after the close. Home Depot was also strong with a gain of 34 cents (1%) to $35.63.
The Nasdaq Composite eked out a gain of 0.64 (0.03%) to 2,375.31. The Standard & Poor's 500 index fell 3.94 (0.34%) to 1,155.79. The materials and energy sectors led the declines, while the utilities sector eked out a small gain.
The action came as investors began to question the nearly $1tr bailout plan devised by the European Union this weekend, especially with regard to some of its funding.
In addition, data showing inflation is rising in China prompted worries over how global demand could be affected if China undergoes further monetary tightening.