Wall Street was more than 1 percent lower on Tuesday afternoon amid a decline in commodity prices and continuing uncertainty about when the Federal Reserve will raise interest rates. The selloff was broad-based. All 30 Dow components declined. All 10 major S&P sectors were lower, led by a 2.2 percent drop in the materials index and a 1.9 percent fall in technology stocks.
Copper prices hit a three-week low, while oil was down about 2 percent on persistent worries about demand, especially in China.
The Fed last week kept rates at near-zero levels, citing the turbulence in a tightly linked global economy, including slowing growth in China. But, Atlanta Fed President Dennis Lockhart said on Monday a rate hike later this year was still possible.
Trading has remained volatile as investors try and gauge the timing of a rate hike. The CBOE Volatility index, known as the "fear gauge", jumped 14 percent to 22.98, above its long-term average of 20.
While 13 of the 17 Fed policymakers still foresee raising rates at least once in 2015, traders are pricing in only a 41 percent chance that the central bank will move in December.
"The potential that the Fed may delay rate hikes until next year will provide even more angst for the markets ... the longer the delay, the greater the potential for an accelerating rate hike schedule," said Tom Stringfellow, chief investment officer at Frost Investment Advisors.
At 12:42 ET (1642 GMT) the Dow Jones industrial average was down 226.25 points, or 1.37 percent, at 16,283.94. The S&P 500 was down 28.93 points, or 1.47 percent, at 1,938.04 and the Nasdaq composite was down 87.96 points, or 1.82 percent, at 4,741.00.
Apple was down 2 percent at $112.86, leading the decline in tech stocks and was the biggest drag on the S&P and the Nasdaq.
Goldman Sachs fell 2.7 percent to $178.43 and was the biggest drag on the Dow after Chief Executive Lloyd Blankfein said he had a "highly curable" form of lymphoma.
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