Updated at 4:05 p.m. ET: Stocks fell Wednesday as renewed upheaval in the euro zone over financial bailouts led investors to book profits from recent gains near the close of a strong third quarter.
The Dow Jones industrial average fell 44 points, sliding for a fourth-straight day.
Violent protests in Madrid against expected austerity measures and growing talk of secession in Catalonia increased pressure on Spanish Prime Minister Mariano Rajoy as he moves closer to asking euro zone policymakers for rescue money.
Rajoy, speaking to the Americas Society in New York, said measures in Spain are necessary to strengthen Europe and the government was committed to fiscal discipline and structural reforms with sacrifice that must be shared across Spanish society.
Meanwhile, Greece faced its biggest anti-austerity protest in more than a year as international lenders admitted to difficulty in working out how to solve Athens' debt crisis.
"There is still a real risk that Europe has to make some decisions that could hold the market together ... over the next few weeks as it relates to Greece and certainly Spain," said T. Doug Dale, chief investment officer for Security Ballew in Jackson, Mississippi.
"There are still enough unknowns out there that it doesn't take a whole lot to get the S&P back off."
The S&P 500 is up more than 5 percent for the third quarter and nearly 2 percent for September, historically a weak month for equities, largely due to actions taken by the U.S. Federal Reserve and European Central Bank to prop up their economies.
Since the Fed's most recent stimulus plan on September 13, the benchmark index has fallen 1.4 percent as earnings warnings from companies, including FedEx Corp and Caterpillar Inc, have sparked concerns about global growth.
But analysts noted Wednesday's declines were limited and credited similar policies by central banks, an improvement in the U.S. housing market and stocks that were cheap compared to historical levels.
"Last year, when you started to see negative news out of Europe, the fear was contagion, the fear was a Lehman-type event. We've removed that tail risk from the marketplace," said Art Hogan, managing director at Lazard Capital Markets in New York.
"Having removed ... the Lehman-type event risk out of Europe makes days like today a little less volatile."
A government report that prices of new U.S. single-family home sales vaulted to their highest level in more than five years in August also helped to reassure jittery investors.
Longer term, the equity outlook appears to be positive. While the S&P 500 wasn't expected to move much from its current level through the end of the year, according to a Reuters poll of analysts, it should advance in the first half of 2013, largely on central bank actions.
Reuters contributed to this report.