The S&P 500 on Thursday posted its largest percentage decline in six months on concerns about the strength of the global economy and its effect on corporate earnings.
The slide dragged the benchmark to below its 150-day moving average for the first time since November 2012.
The selloff, which put the S&P 500 at its lowest since Aug. 7, followed weak data from Germany, Europe's largest economy, and comments from a Fed official who suggested investors had unrealistic expectations about the Fed's eventual rate increase.
German exports in August fell the most since January 2009, and reports earlier in the week showed steep drops in industrial orders and output.
FED Concerned
Adding to market jitters, St. Louis Federal Reserve Bank President James Bullard said he was concerned by a disconnect between the market's view of the Fed's rate-increase path and the central bank's own view.
Expectations of a more dovish Fed had triggered a rally in stocks on Wednesday, but those gains disappeared in Thursday's trading.
Market participants said the end of the Fed's third round of quantitative easing this month was also bearish as it takes away one of the pillars of the five-year bull market.
The Dow Jones industrial average ended down 334.97 points, or 1.97 percent, at 16,659.25; the S&P 500 dropped 40.68, or 2.07 percent, to 1,928.21, and the Nasdaq Composite fell 90.26, or 2.02 percent, to 4,378.34.
The Russell 2000 index of small-cap stocks fell 29.13, or 2.66 percent, to close at 1,067.99.