Concerns over the global economy that battered Wall Street at the start of 2016 took their toll again on Tuesday. 

The S&P 500 fell 1.01% in the second straight day of declines while the Dow Jones Industrial Average dipped 0.75%, and the Nasdaq dropped 0.98%. Over the past two sessions, the S&P 500 has decreased more than 1%. 

European stocks suffered heavy losses, closing their worst day in six weeks, after Germany reported manufacturing orders dropped by 1.2% in February, falling short of estimates for a slight increase. The unexpected sign of weakness in Europe's largest economy compounded global concerns.

Germany's DAX closed 2.6% lower, the CAC 40 in France fell 2.2%, and the FTSE 100 in London slid 1.2%. The Stoxx 50 tumbled 2.3%, its worst daily performance since late February.

Christine Lagarde, managing director of the International Monetary Fund, added to those worries on Tuesday, noting that the world's economic recovery is tenuous.

"We have growth; we are not in a crisis," she said in a speech in Frankfurt. "The not-so-good news is that the recovery remains too slow, too fragile, and risks to its durability are increasing ... There has been a loss of growth momentum. However, if policymakers can confront the challenges, and act together, the positive effects on global confidence -- and the global economy -- will be substantial."

Tax avoidance -- highlighted by the "Panama Papers," which document global tax shelters -- is a "big global problem" that most impacts the middle class, President Barack Obama said during a press conference.

The U.S. Treasury's plans to crack down on inversion deals that reduce tax rates is a step in the right direction, he said.

"When companies exploit loopholes like this, it makes it harder to invest in the things that are going to keep America's economy going strong for future generations," Obama said. "It sticks the rest of us with the tab."

Allergan (AGN - Get Report ) slumped 16% on the U.S. Treasury's plans. Allergan and Pfizer (PFE - Get Report) said in a joint statement that they are reviewing the Treasury's new rules, but haven't said whether it will impact their planned $160 billion merger. However, Reuters sources suggest Pfizer is leaning toward abandoning the deal, rather than amending it.

The U.S. services sector expanded in March at its fastest pace since the end of last year, according to the Institute for Supply Management's non-manufacturing index. Services activity climbed to 54.5 on the organization's scale in March from 53.4 in February, driven by a boost in new orders. Employment also returned to positive territory after falling below 50 in February for the first time in two years.

"The impressive rebound in the ISM service sector report rounds out the equally buoyant performance in the manufacturing sector counterpart last week, and collectively, they point to a robust rebound in growth momentum in March," said Millan Mulraine, deputy chief U.S. macro strategist at TD Securities.

Crude oil ended slightly higher on Tuesday after settling at its lowest level in a month a day earlier. However, skepticism continued to mount that the Organization of Petroleum Exporting Countries can agree upon a production freeze when members meet in Doha on April 17. West Texas Intermediate crude oil closed 0.5% higher at $35.89 a barrel on Tuesday.

Disney (DIS - Get Report) shares fell 1.7% after an expected successor to CEO Robert Iger, Thomas Staggs, announced his resignation, effective next month. Staggs held the position of chief operating officer and will remain as special adviser to Iger through to the end of the fiscal year. Iger will step down as chairman and CEO in around two years.

Tesla (TSLA - Get Report) rose 3.4% despite reporting that it delivered just 14,820 vehicles in the first quarter, below its own forecasts of 16,000. The electric automaker blamed supplier shortages that impacted its production line. Tesla maintained its goal of 80,000 to 90,000 deliveries by the end of the year.