Stocks remained substantially weaker ahead of the close Tuesday as investors focused on the European Union's efforts to address Ireland's debt troubles and inflation in China.
TheDow Jones Industrial Average was down more than 180 points, after eking out a gainMonday even as stocks slumped in the last hour of the trading session.
Earlier, the Dow was down more than 200 points, dipping below 11,000 for the first time in more than a month.
Travelers, Alcoa, and General Electric led the blue-chips lower. Home Depot and Wal-Mart were the only Dow components trading higher.
The S&P 500 and the Nasdaq were also lower. The Dow and the S&P were on pace for their biggest drops since mid-August, while the Nasdaq's drop was the biggest for the index since October.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared more than 10 percent above 22.
The key S&P 500 sectors all skidded, led by energy, materials and financials.
The dollar , meanwhile, rose against a basket of currenciesand the euro, as Ireland's troubles weighed on the currency. The index hit its highest level since Sept. 28.
The European Union was weighing a rescue package for Ireland that would include the International Monetary Fund, according to the Wall Street Journal. The money would come from the European Financial Support Facility, which was formed in the wake of Greece's near-default last May, the Journal said.
European finance ministers were meeting in Brussels to discuss a mechanism for resolving the euro-zone crisis. A possible bailout of Ireland had been expected to be on the table. Meanwhile, Austria is accusing Greece of not living up to commitments for it's EU aid package. Austria has not submitted its contribution to the bailout fund.
European shares posted their biggest one-day drop since July 1 and the lowest close in two weeks.
Meanwhile, Chinese shares sank nearly 4 percent to a one-month lowon reports that China will unveil food price controls and crack down on commodity speculation to contain inflationary pressure.
Commodity prices fell across the board. Oil prices skidded more than 2 percent to just above $83 a barrel, while gold fell below $1,340 an ounce.
While the market drop was deep and widespread, Keith Springer of Springer Financial Markets, said the downdraft reflects a lack of good news for the market to consider rather than bad news out of Europe or China. Market participants have been hearing about rising inflation in China, and Irish debt troubles for some time, he said.
"There's no positive news to counteract any of the negative news, which really isn’t all that bad," Springer said. "The market is using this as an excuse to step back and sell off a little bit."
Springer believes the market could sell off 3 to 5 percent from its highs before the Fed's stimulus plans take effect and the market starts moving higher. He expects the Dow could rise as high as 13,000 and the S&P 500 could hit 1,250 before a bigger correction occurs.
Basic materials, which have benefited from the booming demand from China, were among the biggest losers in U.S. trading. Freeport-McMoRan , Alcoa and Monsanto tumbled.