Stocks fall after euro bond sale rejection

US stocks fell, following the biggest three-day rally since 2009, as German and French leaders proposed a financial-transaction tax and rejected selling euro bonds to halt a debt crisis threatening economic growth.

NYSE Euronext and Nasdaq Inc, two of the biggest exchange operators in Europe, dropped at least 2.7%. Caterpillar Inc., Deere & Co and 3M Co declined at least 1.4%, pacing losses in companies most tied to the economy, as Europe’s economic growth trailed estimates and US housing starts slumped. Citigroup Inc and Bank of America Corp slipped more than 4.2% after billionaire John Paulson’s hedge fund said it reduced positions in both lenders.

The S&P 500 fell 1% to $1,192.74 at 4pm in New York. The benchmark gauge advanced 2.2% yesterday, erasing last week’s drop. The Dow Jones Industrial Average slid 76.89 points, or 0.7%, to $11,406.01.