The weakest consumer confidence report in more than seven years has sent stocks sharply lower for a second straight session.
Continued profit-taking from this month's big run-up, as well as reaction to more disappointing earnings, also contributed to the decline.
The Dow Jones industrial average closed down 147.52, or 1.6 per cent, at 9,121.98.
It was the index's worst finish in three weeks, when the Dow closed at 9,052.44 on October 9th. The index has now lost a total of 423 points over the past two sessions.
Broader stock indicators also dropped. The Standard & Poor's 500 index was off 18.51, or 1.7 per cent, at 1,059.79, and the Nasdaq composite index lost 32.11, or 1.9 per cent, to 1,667.41.
The losses accelerated early in the session when the Conference Board released a survey showing consumer confidence at 85.5 in October, well below the 97 recorded the previous month and the 96 that analysts were predicting. The index compares results to its base year, 1985, when it stood at 100. The October figure is the lowest since February 1994.
The extent of the decline caught market watchers by surprise and intensified concerns that consumers will spend less and already suffering businesses would see profits diminish even more.
AP