The S&P 500 index surrendered 50.80 points, or 2.1 percent, to 2,416.62.
The broad-based S&P dropped 1.5 per cent to 2,506.87, while the tech-rich Nasdaq Composite Index sank 2.2 per cent to 6,635.48.
However, selling set in by afternoon with some of the major technology firms - that led the market's rally earlier this year - experiencing some of the most bruising falls.
Stock indexes are meandering up and down in midday trading as the market steadies following two days of steep drops.
The S&P 500 is nearly 16 percent below the peak it reached in late September.
Then the political gridlock in Washington put the market in a downward spiral, as President Donald Trump held fast on his demands for more border security funding and Democrats resisted, and the government moved closer to a shutdown.
Investors have responded to a weakening outlook for the USA economy by selling stocks and buying ultra-safe US government bonds.
"The bond market has been telling us something for about a year, and that is there's not going to be much inflation and there's not going to be a sustained surge in economic growth", said Wren, of Wells Fargo. The Nasdaq plunged 8.4% on the week, its worst since November 2008. The S&P 500 closed at 2467.42 for a loss of -39.54 points or -1.58%. The yield on the 10-year Treasury finished today nearly a half percent lower than its recent October peak.More news: Walgreens Boots Alliance, Inc. (WBA) : Analysts Watch-List Stock
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The Dow fell 518 points, or 2.2 percent to 22,718.
The S&P 500 is down 256.99 points, or 9.6 per cent.
Other fuel prices also fell.
The stock markets in France, Germany, Britain, Italy, Portugal, Spain, Tokyo and Hong Kong also fell. The British FTSE 100 slipped 0.8 percent. Brent crude, used to price global oils, slipped 4.8 percent to $54.50 a barrel in London. The yield on the 2-year Treasury note fell to 2.62 percent from 2.65 percent. Seoul's Kospi shed 0.9 percent.
Investors around the world have grown increasingly pessimistic about the global economy's prospects over the next few years. The euro rose to $1.1469 from $1.1368.
The defensive consumer staples, utilities and real estate sectors logged gains of 0.1 percent to 0.77 percent, while all the other eight S&P sectors declined.
The British pound rose to $1.2671 from $1.2621.
Walgreens fell 2.8 percent and Conagra, a giant food maker, fell 7.4 percent. Natural gas gave up 3.8 percent to $3.58 per 1,000 cubic feet.