In Europe, renewed concerns Greece may run out of money also spooked investors Tuesday. The euro sank to a 12-year low against the dollar.
The Dow Jones industrial average fell 241 points, or 1.3 per cent, to 17,755 as of 11:45 a.m. Eastern time.
The Standard & Poor's 500 fell 25 points, or 1.2 per cent, to 2,054. The Nasdaq composite lost 67 points, or 1.4 per cent, to 4,875.
Barnes & Noble dropped 8 per cent after reporting earnings that fell short of analysts' forecasts.
The price of oil fell 85 cents to $49.16 a barrel.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.14 per cent.