Investors engaged in a broad sell-off as President Obama prepares to meet with congressional leaders this week to discuss the "fiscal cliff."
The president met with major corporate chief executives Wednesday to discuss how to avert the automatic spending cuts and tax hikes that could push the U.S. economy back into recession.
Major U.S. stock indexes ended Wednesday down more than 1.3%.
The Dow Jones industrial average lost 185.23 points, or 1.5%, to 12,570.95 at the closing bell on Wall Street.
The broader Standard & Poor's 500 index shed 19.04 points, or 1.4%, to 1,355.49.
The Nasdaq entered correction territory, closing down more than 10% from its recent high in mid-September. The Nasdaq lost 37.08 points, or 1.3%, to 2,846.81.
Aside from the fiscal cliff struggle in Washington, investors faced a continuing Eurozone debt crisis and growing turmoil in the Middle East. Israel launched military strikes against Hamas, escalating the conflict.