The Dow Jones Industrial Average dropped 67.55 points (0.59 percent) to 11,415.35 at 1445 GMT.
The broad-market S&P 500 fell 9.96 points (0.83 percent) to 1,194.53 and the tech-rich Nasdaq Composite slid 24.30 points (0.95 percent) to 2,530.90.
The indices opened lower after closing Monday above the levels they held on August 5 just before Standard & Poor's downgraded the US credit rating, sending global markets into a tailspin.
"Downbeat data from Germany has taken the wind out of the bulls' sails," said Sarah Wasserman at Schaeffer's Investment Research. "This news has simply bolstered fears of a global economic downturn."
Germany, the top eurozone economy, reported growth nearly stalled in the second quarter, at 0.1 percent, following a downwardly revised 1.3 percent in the first quarter.
For the entire 17-nation eurozone, gross domestic product edged up only 0.2 percent in the April-June period, European Union data showed Tuesday, spurring fears of a slide back toward recession as leaders try to contain a public debt crisis.
France, the second-largest economy, had posted zero growth for the quarter last week.
US economic indicators were mixed. Starts on housing construction and building permits continued to languish in July, higher than a year before but still lass than half of the pace of the years before the 2008-09 recession.
Industrial production in July rose 0.9 percent, partly due to energy use amid warmer summer weather and a pick-up in auto production as supply disruptions from the Japan earthquake disaster dissipated.
Wall Street shrugged off a pre-market announcement by rating agency Fitch that confirmed the United States still deserved its top triple-A credit score.
Better-than-expected corporate earnings from two major retailers helped to limit the Dow's downturn.
Shares in Wal-Mart jumped 3.6 percent to $51.78. The world's biggest retailer said profit rose 5.7 percent in its fiscal second quarter, beating market expectations, and raised its full-year forecast.
Do-it-yourself retailer Home Depot, another Dow blue chip, bounced up 5.4 percent to $33.16 after posting a 14.3 percent quarterly profit rise and raising its outlook.
The bond market edged higher. The yield on the 10-year Treasury fell to 2.28 percent from 2.29 percent late Monday, while that on the 30-year Treasury slipped to 3.74 percent from 3.75 percent.
Bond yields and prices move in opposite directions.
Copyright AFP (Agence France-Presse), 2011