Investors shrugged off the steep drop in oil futures to focus on other concerns, including glum corporate outlooks and anxiety about first-quarter results. Wall Street was also digesting the minutes of last month's Federal Reserve meeting, trying to decide whether inflation would cause policy makers to become more aggressive with interest rate hikes. Hints of a drop-off in consumer spending, exacerbated by a disappointing outlook from Harley-Davidson Inc., added to the alarm.

"I would've expected the market to act a little bit better based on what crude is doing," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "But with the retail numbers coming in lighter than expected, we're starting to have evidence that higher gas and fuel prices are starting to crimp the consumer, and I think the fear is that that won't change any time soon."

According to preliminary results, the Dow closed down 104.04, or 0.99 percent, at 10,403.93.

The broader gauges also fell. The Standard & Poor's 500 index lost 13.97, or 1.18 percent, to 1,173.79. The Nasdaq composite index fell 31.03, or 1.55 percent, to 1,974.37.

Trading in the Treasury market was choppy, partly because of a poorly received five-year note sale. The 10-year note declined slightly, and its yield rose to 4.37 percent, up from 4.36 percent late yesterday. The U.S. dollar was mixed against other major currencies and gold prices rose.