"There was a perception that the economy was improving, but that has gotten called into question," said Peter Tuz, a portfolio manager at Chase Investment Counsel, which manages $400 million in assets. "The savings from lower gas prices hasn't translated into higher consumer spending yet."
A report from the World Bank late Tuesday after markets closed struck a downbeat note. The bank lowered its forecast for global growth this year to 3 per cent from 3.4 per cent. It blamed sluggish economies in Europe and Japan, and a slowdown in China.
Dismal news on US retail sales and more signs of slowing global growth weighed on financial markets. US and overseas stocks fell and copper plunged to a five-year low. Investors sought safety in government bonds, pushing down the yield on the 10-year Treasury note to its lowest level since May 2013.
The Standard & Poor's 500 index fell 25 points, or 1.3 per cent, to 1,997. The Dow Jones industrial average dropped 268 points, or 1.5 per cent, to 17,335. The Nasdaq composite fell 39 points, or 0.9 per cent, to 4,621.