The slide came on the five-year anniversary of record high closes for the Dow and S&P 500. The Dow is about 700 points off its all-time high, 14,164.53. It would take a 5 percent rally from here to reach the record.
Investors were discouraged by an International Monetary Fund report released overnight on Monday that said the global economy was weakening and the downturn afflicting developing nations has begun to spread.
The IMF forecasts that the world economy will expand 3.3 percent this year, down from the estimate of 3.5 percent growth it issued in July. Its forecast for growth in 2013 is 3.6 percent, down from 4.1 percent in April.