All three indexes had their worst percentage decline since July 16 after a weak economy assessment provided by the Federal Reserve on Tuesday. The U.S. central bank said it would take measures to reduce borrowing costs. But some traders questioned the effectiveness of the measures would have.
"Adding liquidity to the system saying it will buy Treasury bonds is not helping the average man on the street," said Robert Pavlik, chief market strategist with Banyan Partners LLC.
"It will not create jobs or help the housing market," he added.
Top 10 sectors in the S & P fell more than 1 percent, led by industrial shares, which fell 3.9 percent, and financials, which lost 3.6 percent. Shares of diversified manufacturer 3M Co was the biggest drag on the Dow, with a drop of 3.5 percent.
A report on weak data from factories in China are adding to worries about a global slowdown and pressured stocks and raw materials while giving a boost the prices of Treasury bonds.
The Dow Jones industrial average fell 265.42 points, or 2.49 percent, at 10378.83. The Standard & Poor's 500 lost 31.59 points, or 2.82 percent, at 1089.47. The Nasdaq Composite Index gave up 68.54 points, or 3.01 percent, at 2208.63.
The Nasdaq fell 2.7 percent so far this year, while the S & P 500 lost 2.3 percent and the Dow 0.5 percent.
Among the biggest losers on the Nasdaq and the u.s. stock were ranked Cisco Systems Inc shares, which fell 2 percent to $ 23.73 during the session, then tumbled more than 5 percent in extended trading after the company income reported weaker than expected.
Shares of Macy's Inc. were a rare presence of positive news, an increase of 5.9 percent to 20.52 U.S. dollars after reporting second-quarter earnings that beat expectations, forecasting a strong sales growth in the same types of stores.
Shares of Dow component Walt Disney Co. fell 3 percent to $ 34.22 despite reporting earnings and revenue for the third quarter better than expected on Tuesday afternoon.
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