Major U.S. stock indexes fell by the biggest amount in six weeks Monday as investors grew worried that they had been too quick to bet on an economic rebound during the market's five-month rally.
Overseas stocks and commodity markets also tumbled, and demand for the relative safety of U.S. government debt sent Treasury yields lower and the dollar higher.
The Dow Jones industrial average skidded 186 points, and all the major indexes fell at least 2%. The Nasdaq composite index was hardest hit, dropping 2.8%, but it also has had the biggest advance as Wall Street has rallied this year.
A shudder in China's main stock market touched off a wave of selling that spread to Europe and then the U.S. Share prices in Shanghai lost 5.8% as investors worried that the Chinese government would tighten bank lending policies. Investors outside China have been hoping that strengthening in that country's economy would spill over to other parts of the globe.
A slide in quarterly profits at home improvement retailer Lowe's only added to worries about the economy. The company said consumers were holding off on some purchases. Shares of Lowe's lost 10%.
Some investors are worried that weakness among consumers will hold the economy back, said Quincy Krosby, market strategist at Prudential Financial.
"Those who are negative say you are not going to see consumers loosen those purse strings in any meaningful way," she said.
After falling as much as 205 points, the Dow closed at 9,135.34 points, down 186.06 points, or 2%, and the index's lowest close since July 29. It was the Dow's sixth drop in the last nine sessions.
The broader Standard & Poor's 500 index, which is the basis for many investments like mutual funds, sank 24.36 points, or 2.4%, to 979.73.
On Thursday the S&P; 500 closed up 50% from a 12-year low of about 676 set in early March.
The slides Monday in the Dow and S&P; 500 were the biggest since July 2, when a weak employment report fanned worries about the economy and pushed stocks down more than 2.5%.
The Nasdaq fell 54.68 points, or 2.8%, to 1,930.84, its biggest drop since June 22.
The Russell 2,000 index of smaller companies lost 2.8%.
Falling stocks outpaced rising ones by about 5 to 2 on the New York Stock Exchange, where volume was light.
Many analysts said stocks had piled on gains too quickly.
"We have come an awful long way. To not expect a sell-off after that degree of increase -- I think you're dreaming," said John Merrill, chief investment officer at Tanglewood Wealth Management in Houston.
Overseas, key stock indexes fell 3.1% in Japan, 1.5% in Britain, 2% in Germany and 2.2% in France.
Commodities fell as investors worried that a weak economy would keep demand down.
Oil futures fell 76 cents to settle at $66.75 a barrel on the New York Mercantile Exchange, leaving crude down more than 5% in two days.
The yield on the benchmark 10-year Treasury note slumped to 3.49% from 3.55% late Friday.
The dollar rose against other major currencies, while gold prices fell.