Another steep drop in the price of oil has weighed on global markets.
Investors remained deeply concerned about the global economy following this week's disappointing Chinese and US manufacturing data.
Energy stocks fell as oil giants Exxon Mobil and Chevron reported their worst quarterly results in more than a decade. In the technology sector, Google's parent company, Alphabet, overtook Apple as the world's most valuable publicly traded company.
The Dow Jones industrial average lost 295.64 points, or 1.8 per cent, to 16,153.54. The Standard & Poor's 500 index fell 36.35 points, or 1.9 per cent, 1,903.03 and the Nasdaq composite fell 103.42 points, or 2.2 per cent, to 4,516.95.
It has a busy week on the economic data front, particularly in the US, where the week ends with monthly payroll figures. So far, the numbers haven't impressed. On Monday, the Institute for Supply Management said its gauge of factory activity pointed to a contraction while China's official survey found that manufacturing fell to its lowest level in more than three years.
Those reports have weighed heavily on the market, and have put investors back in a selling mood after a brief reprieve last week. US government bond prices rose as investors sought safety. The yield on the 10-year Treasury note fell to 1.86 per cent from 1.95 per cent late Monday.
The weak manufacturing reports weighed heavily on oil prices, and the selling pressure continued on Tuesday. Benchmark US oil slumped $1.74, or 5.5 per cent to close at $29.88 a barrel on the New York Mercantile Exchange, a day after it plunged nearly six per cent. Brent crude lost $1.52, or 4.4 per cent, to $32.72 a barrel in London.
Energy companies, as has been the case for several weeks, followed oil prices lower. Exxon Mobil fell $1.70, or 2.2 per cent, to $74.59 and Chevron fell $4.05, or 4.7 per cent, to $81.24.
Chevron and Exxon, once the two world's largest publicly traded companies, are showing signs of stress because of the plunge in oil prices. Exxon reported its lowest profit since 2002 and also announced it was curtailing its stock buyback program. Chevron posted its first quarterly loss since 2002.
Bank stocks fell on worries that oil prices will cause more energy loans to go bad, and that the slowing economy might impact their bottom line. There's also concern that the slowing economy might put the brakes on the Federal Reserve's plans to raise interest rates, which ultimately help banks make more money by raising borrowing rates on loans.
JPMorgan Chase lost $1.83, or 3.1 per cent, to $57.03, Bank of America dropped 73c, or 5.2 per cent, to $13.23 and Citigroup fell $2.06, or five per cent, to $40.42.
In other company news, Alphabet, the recently formed parent company of Google, rose $12.65, or 1.7 per cent, to $764.65 after the company's results handily beat analysts' forecasts late Monday. With yesterday's gains, Alphabet is now the largest publicly traded company by market value, overtaking Apple.
The dollar fell to 120.04 yen from 120.12 yen. The euro strengthened to $1.09,17 from $1.08,95.
In other energy trading, heating oil fell 2.6c to $1.01,1 a gallon, wholesale gasoline fell 8.2c to $1.00,1 a gallon, and natural gas fell to 12.7s, or six per cent, to $2.02,5 per thousand cubic feet.
In metals, gold fell 60c to $1,127.30 an ounce, silver fell five cents to $14.29 an ounce and copper was flat at $2.02,5 per pound.