The Dow Jones industrial average fell 312.47 points, or 1.92 per cent, to 16,002.2, the S&P 500 lost 49.49 points, or 2.56 per cent, to 1,881.85 and the Nasdaq Composite dropped 142.53 points, or 3.04 per cent, to 4,543.97.
Goldman Sachs plunged nearly 3.8 per cent as the greatest weight on the blue-chip index. The Dow and S&P are on track for their worst quarter in four years.
Apple closed nearly two per cent lower despite news that it sold more than 13m units of the new iPhone 6s and 6s Plus models in a record first weekend of sales.
There was a a 6.3 per cent decline in the iShares Nasdaq biotechnology ETF (IBB). The ETF fell further into bear market territory, or more than 20 per cent from its 52-week high.
“I think it’s a lot of panic. It’s a lot of people who came in recently,” said Paul Yook, portfolio manager at BioShares Funds.
“In hindsight, clearly the market did not price in this political risk.”
Shares of Valeant closed down nearly 17 per cent amid reports that Democrats are pressing a Republican committee chairman to force the pharmaceutical firm to turn over documents tied to a price hike from earlier this year.
Pharma shares have been in turmoil since last week when presidential hopefulHillary Clinton tweeted about “price gouging” by some companies.