US stocks fell for a third straight day yesterday, spooked by uncertainty over the health of financials and concerns that the explosive rally since March may have run ahead of economic reality.<br /><br />September began living up to its reputation as the worst month for stocks as elevated anxiety pushed the three major indexes down 2 per cent for the day, their worst percentage losses since 17 August.<br /><br />Scepticism that stocks can add to a nearly 50 per cent rally over the last six months prevailed in the market, sending the S&amp;P 500 below the psychologically important threshold of 1,000.<br /><br />The KBW bank index dropped 5.8 per cent. Among the top drags were shares of <strong>JPMorgan Chase,</strong> down 4.1 per cent at $41.67, and <strong>Citigroup, </strong>down 9.2 per cent at $4.54.<br /><br />The Dow Jones industrial average tumbled 185.68 points, or 1.96 per cent, to close at 9,310.60. The Standard &amp; Poor&rsquo;s 500 Index fell 22.58 points, or 2.21 per cent, to 998.04. The Nasdaq Composite Index slid 40.17 points, or 2.00 per cent, to 1,968.89.<br /><br />Fears of a revival of balance-sheet troubles in the financial sector led to a sharp rise in the CBOE Volatility Index or VIX. Wall Street&rsquo;s favourite barometer of investor fear shot up 12.1 per cent to 29.15, the highest level since early July.<br /><br />Solid evidence that the economy was pulling out of the worst recession in 70 years came from the Institute for Supply Management's August manufacturing index, which grew for the first time in 19 months, partially driven by the government&rsquo;s cash-for-clunkers program.