U.S. stocks on Monday fell for a third session, with the S&P 500 closing below its 200-day moving average and the Nasdaq Composite off 8.6 percent from its September record, as investors awaited earnings and fretted signs of a slowing global economy.
"I haven't seen one bit of news, but we've had another failed late-day rally; everyone has been staring at their screens at the 1,905 level. Once you get past 3 o'clock and you can't stay above it, we've now officially broken what's considered an important technical level for the first time since November 2012," said Peter Boockvar, chief market analyst at the Lindsey Group.
"That's what has brought out the panic," Boockvar added of the market's rapid descent, which had benchmark indexes spiraling downward as the end of the session approached.
"There is a huge question mark about what does growth look like. The U.S. was the best house in a bad neighborhood, but we didn't realize the neighborhood might have been deteriorating faster than we realized. Europe is a big question mark, and China seems happy with its lower growth rate," said Kim Forrest, senior equity analyst at Fort Pitt Capital.
During the weekend, Federal Reserve officials said the central bank might move more slowly on raising interest rates if weak growth overseas threatens the U.S. recovery.
CSX rallied as the rail operator declined to comment on a Wall Street Journal report that it's been approached by Canadian Pacific Railway about a possible merger. J.C. Penney surged after naming Home Depot executive Marvin Ellison as president of the department-store chain, with plans for him to take the helm as chief executive officer in 2015.
The CBOE Volatility Index, a measure of investor uncertainty, surged 16 percent to 24.64, its highest close since June 2012.
While hitting its highest level in more than a year, the VIX is "not at a crazy worry we're going into a bear market by any stretch," said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
Falling below its 200-day moving average, the shed 31.39 points, or 1.7 percent, to 1,874.74, down 7 percent from its bull-market high.
The Nasdaq dropped 62.58 points, or 1.5 percent, to 4,213.66.
"If the market is going to find a bottom in the near term, we want to see the S&P 500 and Nasdaq Composite close back over their 200-day moving averages at 1,905 and 4,300 respectively," Elliot Spar, market strategist at Stifel, Nicolaus & Co., emailed in afternoon commentary ahead of the close.
For every share rising, more than two fell on the New York Stock Exchange, where 905 million shares traded. Composite volume cleared 4.3 billion.
The dollar declined against the currencies of major U.S. trading partners, while dollar-denominated currencies were mixed, with gold futures for December rising $8.30 to $1,230.00 an ounce and the November crude-oil contract falling 8 cents, to $85.74 a barrel.
The U.S. bond market was closed due to the Columbus Day holiday.
Coming Up This Week:
8:30 a.m.: Retail sales for September
8:30 a.m.: Producer price index for September
8:30 a.m.: Empire State Index for October
10 a.m.: Business inventories for August
2 p.m.: Federal Reserve's Beige Book
8:30 a.m.: Weekly jobless claims for week ending Oct. 11
9:15 a.m.: Industrial production for September
10 a.m.: Home Builders Index for October
10 a.m.: Philly Fed
8:30 a.m.: Housing starts for September
9:55 a.m.: Consumer sentiment for October
More From CNBC.com: