Investors' worries over whether European countries can avoid recession overshadowed encouraging news from the U.S. housing market.
The Dow Jones industrial average was down 119 points at 12,383 after the first hour of trading. The Standard & Poor's 500 index was down 11 points at 1,305. The Nasdaq composite index slumped 25 points to 2,815.
The leaders of the 27 countries that make up the European Union are meeting to try and find a way to keep the debt crisis in Europe from spiraling out of control. They are also seeking ways to promote jobs and growth.
The meeting comes a day after the Organization for Economic Cooperation and Development warned that the 17 countries that use the euro risk falling into a "severe recession."
Political turmoil in Greece is already threatening to pull the euro apart. Borrowing costs are rising for the most indebted governments like Italy and Spain. Worried savers are pulling funds out of banks even as unemployment soars.
The euro was also under pressure, losing 0.3 percent to $1.2630, near a four-month low. Markets fell broadly in Europe. Benchmark indexes in France, Germany and Britain all fell about 2 percent.
Yields on Treasury securities fell as investors shifted money into low-risk investments. The yield on the 10-year note declined to 1.72 percent from 1.77 percent late Tuesday.
Europe's struggles come at a time when Asia too is slowing. China's economic growth fell to a nearly three-year low of 8.1 percent in the first quarter and factory output in April grew at its slowest pace since the 2008 crisis, raising the threat of job losses and possible political tensions.
Events in Europe and in Asia overshadowed encouraging news from the U.S. housing market.
The Commerce Department said sales of new homes rose solidly last month, adding to evidence of gradual improvement in the housing market. Americans bought 3.3 percent more homes in April led by strong gains in Midwest and West.
Facebook stabilized after two tumultuous days. The stock rose 5 percent to $32.44, although that's still far below the $38 it was priced at before its initial public offering Friday.
Other stocks making big moves included:— Dell fell 15 percent after the after the computer maker reported disappointing first-quarter results and predicted weak sales for its fiscal second quarter. Its first quarter profit fell 33 percent on lower sales to big businesses, consumers and the public sector.— Ford Motor rose 2 percent, a day after the company won back its blue oval logo, factories and other assets that were pledged as collateral for a massive loan taken out last decade.— Guess Inc. rose over 5 percent after its first-quarter results beat Wall Street's expectations, and an analyst recommended that investors buy the stock.