US stocks ended sharply lower on Monday, sending the major market indexes to fresh lows for the year, as some investors abandoned the market on signs that al Qaeda may have been behind the Madrid bombings, spurring worries about more violence.
Markets have logged their fifth losing session out of six.
Delta Air Lines, which said its quarterly loss would be larger than it expected, was the largest percentage loser on the Standard & Poor's 500 index, while insurer American International Group Inc also weighed.
The fallout from the Madrid attacks, which occurred on March 11, continued over the weekend as an unexpected win by the Socialists in Spain's general election triggered concern over the direction of the country's economic policies, helping to send European markets lower.
Also this weekend, the Spanish government said it had a videotape, purportedly from Osama bin Laden's al Qaeda, saying it carried out the attacks in retaliation for Spain's support for the US-led war on Iraq.
"The attacks are a reason to keep your wallet in your pocket," said Todd Clark, head of listed trading at Wells Fargo Securities. "The markets are in the process of figuring out what the next catalyst will be."
US Homeland Security Under-secretary Asa Hutchinson said on morning television shows on Monday that he believed al Qaeda was involved in the multiple attacks in Spain that killed 200 people and injured about 1,500.
The Dow Jones industrial average closed down 137.19 points, or 1.34 percent, at 10,102.89. The tech-heavy Nasdaq Composite, which had its biggest percentage fall in six weeks, ended down 45.53 points, or 2.29 percent, at 1,939.20. The S&P 500 Index closed down 16.14 points, or 1.44 percent, at 1,104.43.
The Dow is now down about 6 percent from its closing high set earlier this year, while the Nasdaq is down about 10 percent from its closing high. The S&P 500 is down about 5 percent from its high. Each of the major indexes are still in negative territory for the year.
Traders also attributed some market jitters to what might come from Tuesday's meeting of Federal Reserve policymakers to discuss short-term interest rates. The Fed is expected to leave rates at a four-decade low of 1 percent until it sees signs that the employment outlook is brightening.
Volume was heavier than usual on the New York Stock Exchange, with about 1.5 billion shares changing hands, above last year's 1.4 billion daily average. Roughly 1.7 billion shares traded on the Nasdaq, below last year's daily average of 1.8 billion. Declining issues outpaced advancers by about 3-to-1 on the NYSE, and by about 4-to-1 on Nasdaq.
Delta also pulled down the S&P airline index, which tumbled 5 percent to end at 136.24. The airline warned the loss for its March quarter will be higher than previously expected, citing pressure on passenger revenue and higher fuel prices. The stock closed down $1.08, or 12 percent, at $7.76.
Shares of AIG ended down $1.55, or 2 percent at $70.06.
Nortel Networks Corp sank $1.18, or 18 percent to end at $5.24 and was the most active on the New York Stock Exchange.
United Technologies Corp was the only Dow stock to close higher. The defence company's shares were bolstered after Deutsche Bank raised its rating to "buy" from "hold." The stock ended up 55 cents at $87.90.