U.S. stocks continued their slide as shares of Apple Inc , which have tumbled nearly 20 percent from their record high, declined after Goldman Sachs trimmed its price target for the stock for the second time in just over a week.
Consumer discretionary stocks also plunged as several retailers, including Target Corp, gave underwhelming quarterly results and earnings forecasts.
As the outlook for corporate earnings growth dims, equities are bound to lose their footing, said Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
"It's been one of the positive catalysts that have pushed the market up for most of this year," O'Rourke said, referring to corporate earnings. "Now that's fading, so people are more apt to take profit and de-risk going into the year-end."
Oil prices lost ground as fears about slowing global demand and a surge in U.S. production outweighed expected supply cuts by the Organization of the Petroleum Exporting Countries (OPEC). U.S. crude prices have fallen 30 percent from a near four-year peak in early October. Brent crude prices have dropped 26 percent in the same period.
U.S. crude futures tumbled 7.5 percent to $52.91 per barrel. Brent crude futures dropped 7.4 percent to $61.84 a barrel.
Meanwhile, the dollar index, tracking the U.S. unit against a basket of six major currencies, rose 0.4 percent as the greenback recovered after having been weighed by weak U.S. housing data. Other safe-haven currencies such as the yen and Swiss franc also gained.
Keeping with the flight to safe-haven assets, the benchmark 10-year U.S. Treasury yield also touched a seven-week low, though it later rose above that level.
On Wall Street, the Dow Jones Industrial Average fell 380.6 points, or 1.52 percent, to 24,636.84, the S&P 500 lost 28.43 points, or 1.06 percent, to 2,662.3 and the Nasdaq Composite dropped 50.68 points, or 0.72 percent, to 6,977.80.
Benchmark 10-year notes last rose 1/32 in price to yield 3.0555 percent, from 3.059 percent late on Monday.
MSCI's gauge of stocks across the globe shed 1.23 percent.
Stock markets around the world have suffered a shakeout in the past two months, pressured by worries of a peak in corporate earnings growth, rising borrowing costs, slowing global economic momentum and international trade tensions. Trillions of dollars were wiped off equities in a particularly torrid October.
In Europe, the STOXX 600 dropped as shares of technology companies lagged. Shares of automakers extended their decline following the arrest of Renault SA and Nissan Motor Co Ltd chairman Carlos Ghosn for alleged financial misconduct.
Earlier, Italian government bond yields jumped to a one-month high and Italian banking stocks dropped to a two-year low, hurt by risk aversion and concerns over the Italian budget.