The action extended yesterday’s selloff after the Federal Reserve acknowledged "significant" downside risks to the economy and noted "strains" in global financial markets, a reference to debt-strapped Europe.
A weak reading on manufacturing in China also contributed to the slowdown fears. And, a lack of progress in containing Europe's debt crisis, which has weighed on markets for months, added to the grim mood.
In economic news: 423,000 Americans filed new claims for unemployment benefit last week, showing no improvement in a stubbornly weak U.S. jobs market.
In other news, Christmas is shaping up to be a struggle for the nation's retailers.