"Everyone's skittish about the economy," said Ed Cowart, who helps manage $6 billion at Eagle Asset Management in St. Petersburg, Florida.

The Dow fell 198.59, or 1.98 percent, to 9861.65, the biggest loss in a day since Feb. 4. The Standard & Poor's 500 Index dropped 20.76, or 1.9 percent, to 1052.67. All 10 of the groups that constitute the stock benchmark fell. The Nasdaq Composite Index declined 34.55, or 2.1 percent, to 1578.48. The index's loss this year reached 19 percent.

Some investors see little chance for a turnaround in coming weeks as earnings estimates continue to fall. The S&P 500 dropped six of the past seven weeks and is 10 percent below its Jan. 4 peak this year.

Profit for the S&P 500 fell almost 12 percent in the first quarter, almost double expectations, and analysts are lowering forecasts for the current quarter, according to Thomson Financial/First Call.

"Have orders picked up? No. And that's where we need validation before stocks will post significant gains," said Charles Glovsky, a money manager at Independence Investment, which oversees $21 billion in Boston.

After falling 8.3 percent this year, the S&P 500 trades for 20.5 times forecast earnings, the lowest valuation this year, according to Bloomberg data.

Declining stocks outnumbered advancing stocks two-to-one on both New York Stock Exchange and the Nasdaq Stock Market. Some 1.12 billion shares traded on the Big Board, according to preliminary figures, 19 percent below the three-month daily average, and the lowest in four weeks.