Some of the market's losses eased briefly on a report that new home sales in May rose 7.6 percent, or 369,000 units, much better than expectations for 346,000.
Home builder shares nevertheless ultimately ignored the positive data, with the iShares US Dow Jones Home Construction fund, an exchange-traded proxy that tracks the industry, off for the session.
The rise in new home sales, to their highest levels since April 2010, provided a ray of hope in an otherwise gloomy economic picture.
"The key difference between then and now is that, rather than being stimulated by temporary policy support, a more fundamental recovery, driven by record low valuations and improving confidence towards the housing sector, appears to be underway," said Paul Diggle, properly economist at Capital Economics in London.
But with so much uncertainty on the horizon, the expectation is that markets are likely to be volatile through the summer.
"We still believe the global equity markets will trace out a very choppy advance during the second half of the year," said Sam Stovall, chief equity strategist at Standard & Poor's. "As a result, we think investors will continue to drive with their low beams on, being willing to make only short-term investment commitments."
In corporate news:
Kirby Corporation shares plummeted after the marine transportation and diesel engine company cut its second-quarter guidance.
Chesapeake Energy also has found itself under fire again, this time on a Reuters report that the company colluded with Encana to suppress land prices in areas thought to be rich with gas and oil. The report was based on emails between the companies.
Quest Software was among the most positive stories of the day, rising sharply on news that a strategic bidder proposed to buy the enterprise management software producer for about $2.32 billion in cash. The offer topped an earlier bid of nearly $2.17 billion from private investment firm Insight Venture Partners.
Constellation Brands also surged on speculation that it would benefit from Anheuser-Busch Inbev's buyout of Coroner beer brewer Grupo Modelo. Constellation is involved in a joint venture with Grupo Modelo.
Research In Motion, which is scheduled to report quarterly earnings later this week, is considering separating out its handset manufacturing business from its messaging network, according to a report in the Sunday Times.
The paper reported Amazon.com and Facebook could be buyers.