Most of the damage was felt in European markets, which fell sharply after a closely watched gauge of business activity for the region fell to a nine-month low.
The disappointing news about Europe’s economy also weighed down Wall Street. The Dow Jones industrial average opened lower and finished the day with its second triple-digit loss in a row.
European market indexes sank after the economic news. Germany’s DAX fell 1.6 percent, France’s CAC 40 fell 1.9 percent and the U.K.’s FTSE 100 lost 1 percent.
In U.S., the Dow slid 116.81 points, or 0.7 percent, to 17,055.87. The S&P 500 index lost 11.52 points, or 0.6 percent, to 1,982.77 and the Nasdaq composite fell 19 points, or 0.4 percent, to 4,508.69.
The Dow’s triple-digit fall on Tuesday follows a 107-point stumble from the day before. The blue-chip index hasn’t posted two losses of 100 or more points since June.
Along with the bad economic news, investors had geopolitical concerns to worry about Tuesday.
The U.S. and five Arab nations attacked the Islamic State group’s headquarters in eastern Syria in nighttime raids Tuesday. U.S. aircraft as well as Tomahawk cruise missiles launched from Navy ships in the Red Sea and the northern Persian Gulf were used.
Investors moved money into U.S Treasury bonds and gold, which are considered havens during times of trouble. The yield on the 10-year U.S. Treasury note fell to 2.53 percent from 2.57 percent. The price of gold rose $4.10, or 0.3 percent, to $1,222 an ounce.
In other metals trading, silver edged up half a penny to $17.78 an ounce. Copper fell less than a penny to $3.04 a pound.
U.S. health care stocks were among the hardest hit after the Obama Administration announced rules that would go after companies trying to do so-called corporate inversion deals. Such deals happen when a company merges with an overseas competitor to legally move its headquarters out of the U.S. to avoid paying high corporate tax rates. Health care companies have been among the most active in striking such deals.
Shares fell for Medtronic and AbbVie, which have considered inversion deals. Medtronic lost $1.90, or 3 percent, to $64.08 and AbbVie fell $1.15, or 2 percent, to $57.56. AstraZeneca, which was approached by Pfizer earlier this year to do an inversion deal, fell $3.54, or 5 percent, to $71.13.
The euro was flat at $1.286 while the dollar rose 0.1 percent to 108.86 yen.
In oil markets, U.S. crude oil rose 69 cents to close at $91.56 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 12 cents to close at $96.85 on the ICE Futures exchange in London, reaching its lowest level since June of 2012.
In Asia, the decline in stocks was more modest. Hong Kong’s Hang Seng shed 0.3 percent and Seoul’s Kospi fell 0.6 percent. The Shanghai Composite Index gained a 0.2 percent.