Selling picked up speed late in the day and indexes closed around their session lows after the US Senate voted to end debate on the sweeping overhaul of financial regulation, allowing a final vote on the bill.
The S&P 500 finished down 12 per cent from its 23 April, closing high, signaling a correction and marking the worst day since late April 2009.
Banks and commodity-related stocks were among the hardest hit. The KBW Bank index slid 5.1 per cent. The S&P Energy index fell 4.4 per cent, while US June oil futures fell 2.7 per cent, or $1.86, to settle at $68.01 a barrel.
The Dow Jones industrial average dropped 376.36 points, or 3.60 per cent, to 10,068.01. The Standard & Poor’s 500 Index slid 43.46 points, or 3.90 per cent, to 1,071.59. The Nasdaq Composite Index lost 94.36 points, or 4.11 per cent, to 2,204.01.