The Dow Jones industrial average fell 223 points, or 1.75%, to 12,598. The Standard & Poor's 500 Index dropped 23 points, or 1.76%, to 1,338. The Nasdaq Composite Index lost 65 points, or 2.25%, to 2,859.
European markets were broadly lower, with the the Stoxx Europe 600 losing 2.8%. Spain's IBEX-35 index dropped 2.2%, while Italian FTSE MIB Index shed 3.6%.
Meanwhile, stress in the peripheral debt market won't ease as the Spanish 10-year bonds yields hit an euro-era high of 7.51% and Italian 10-year yields remain above 6%.
Gold dropped 0.7% to $1,571 an ounce, while crude-oil futures slumped 3.8% to $88.29 a barrel.