The S&P energy index ended up 0.1 per cent after falling as much as 2.6 per cent. It rebounded late in the day as oil prices jumped by the most in more than two years ahead of options expiration. Crude oil prices remained near six-year lows despite the day's jump, however.
S&P 500 materials and financial sectors were the day's worst performers, both falling more than 1 per cent.
The price of copper, a key industrial metal, touched its lowest in five and a half years, weighing on shares of producers including Freeport McMoRan Inc, after the World Bank cut its economic growth forecasts for this year and next.
Adding to investor concerns, US retail sales registered their biggest drop in 11 months in December The S&P retail index fell 0.8 per cent.
"You look at the obliteration in oil, copper ... there are a lot of questions about worldwide demand and growth," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
"With an earnings season just getting started, there's a lot of nervousness, given we've had six years of up markets. Are we due for a down market?"
The Dow Jones industrial average fell 186.59 points, or 1.06 per cent, to 17,427.09, the S&P 500 lost 11.76 points, or 0.58 per cent, to 2,011.27 and the Nasdaq Composite dropped 22.18 points, or 0.48 per cent, to 4,639.32.
US crude oil settled up 5.6 per cent and Brent ended up 4.5 per cent, snapping a four-day slide.
The S&P 500 briefly broke below its 120-day moving average, a technical support level, and hit a new low for the year at 1,988.44. S&P e-minis also broke support and hit an intraday low for the year.
The S&P 500 is now 3.8 per cent below the record high reached on December 29.
Shares of copper producer Freeport McMoRan tumbled for a second day. Shares ended down 10.9 per cent at $18.74 and the stock was the S&P 500's biggest percentage decliner.
Expectations for US fourth-quarter earnings have fallen sharply in recent months, with growth now estimated at just 3.6 per cent compared with an Oct. 1 estimate for 11.2 per cent, according to Thomson Reuters data.
JPMorgan Chase & Co, the biggest US bank by assets, ended down 3.5 per cent at $56.81 after reporting a 6.6 per cent drop in quarterly profit. Wells Fargo & Co shed 1.2 per cent to $51.25 after posting quarterly results.
A large trade in the options on the S&P 500's tracking ETF suggested positioning for a further decline in the market within the next week and a half. A trader paid $1.23 a contract for 43,830 SPY puts at the $195 strike price, which corresponds to the 1,950 level on the S&P 500.
Declining issues outnumbered advancing ones on the NYSE by 1,856 to 1,238, for a 1.50-to-1 ratio on the downside; on the Nasdaq, 1,743 issues fell and 994 advanced for a 1.75-to-1 ratio favoring decliners.
The benchmark S&P 500 index posted 13 new 52-week highs and 29 new lows; the Nasdaq Composite recorded 39 new highs and 130 new lows.
About 8.1 billion shares changed hands on US exchanges, compared with the 7.1 billion average for the last five sessions, according to data from BATS Global Markets.
Copyright: Thomson Reuters 2015