Some highlights from the day's business news:
"Now that we have solved the debt ceiling issue, the market has moved onto the other data, which has taken a significant turn for the worse," said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research.
The Dow Jones industrial average plunged 266 points, or 2.2%, to close at 11,867. The Dow was dragged lower by the industrial and manufacturing heavyweights of the 30-member index: Alcoa, General Electric, United Technologies and Boeing.
This was the eighth straight day of declines for the Dow - a losing streak not seen since October 2008, when the financial system was in the depths of the crisis. The Dow has fallen roughly 6.7% since the sell-off began on July 22.
The S&P 500 lost 33 points, or 2.6%, to 1,254 - pushing it into negative territory for the year. TheÂ Nasdaq Composite dropped 75 points, or 2.8%, to 2,669.
Americans choose to save, not spend, in June
Americans earned a little bit more income in June, but they chose to stash it away rather than spend it.
Personal spending fell 0.2% during the month, according to data released Tuesday by the Commerce Department.
It marked the biggest monthly decline in consumer spending since September 2009 and fell short of economists' forecasts for a slight increase of 0.1%.
"It's consistent with this flat spot we're seeing in the economy," said Paul Ballew, chief economist at Nationwide. "Consumers retrenched underneath all the pressures between rising gas prices and continued housing challenges."
Personal income rose 0.1% in June.
- CNNMoney.com's Ken Sweet and Annalyn Censky contributed to this report.