The Dow Jones industrial average fell 139 points, or 0.9 per cent, to close at 14,659 Monday. It was down as much as 248 in the first hour of trading.
The Standard & Poor's index fell 19 points, or 1.2 per cent, to 1,573. The Nasdaq composite fell 36 points, or 1.1 per cent, to 3,320.
An increase in China's commercial lending rates worried investors. The Shanghai Composite Index plunged 5 per cent.
The yield on the 10-year Treasury note rose to its highest level in almost two years.
Seven stocks fell for every one that rose on the New York Stock Exchange. Volume was heavy at 4.7 billion shares.