The Dow Jones industrial average (^DJI) fell 170 points, or 1.1 percent, to 14,776, the Standard & Poor's 500 index (^GPSC) lost 26 points, or 1.6 percent, to 1,630 and the Nasdaq composite index (^IXIC) surrendered 79 points, or 2.2 percent, to 3,578.
Fears of potential conflict in Syria pushed the price of U.S. benchmark crude oil for October delivery higher by $3.09 to $109.01 a barrel, its highest level since February 2012.
A number of nations and groups, including Britain, France, Canada and the Arab League, joined the United States in urging a firm response to Assad's government and said the world shouldn't stand by as chemical weapons are used.
Defense Secretary Chuck Hagel said U.S. military forces in the region are "ready to go" should President Barack Obama order action against Syria.
Another potential economic headwind for the market is the need to raise the federal government's borrowing authority soon. U.S. Treasury Secretary Jack Lew said it was essential for Congress to raise the borrowing limit by mid-October or the country will face default.
In other economic news, the Standard & Poor's/Case-Shiller 20-city home price index rose 12.1 percent in June from a year earlier, nearly matching a seven-year high. But month-over-month price gains slowed in most markets, a sign that higher mortgage rates may be weighing on the housing recovery.
Meanwhile, the Conference Board said its consumer confidence index rose to 81.5 in August, up from 80.3 the month before. Economists had expected 79, according to FactSet.
Procter & Gamble (PG) gave former CEO Bob McDonald a pay package worth $15.9 million during his final full year at the consumer-products company -- 5 percent more than in the previous year, according to a regulatory filing. McDonald's retirement was announced abruptly in May, with the company facing pressure to improve its results.
More Stocks in the News:
- Walmart Stores (WMT) plans to begin offering health benefits to employees' domestic partners -- regardless of gender -- beginning next year. Walmart has been a laggard among large U.S. corporation in offering health and other benefits to domestic partners. The company said it was important to have a consistent policy across all 50 states.
- Shares of J.C.Penney (JCP) ended a see-saw day day of trading down 1.4 percent to $13.17 a day after hedge fund manager William Ackman, the biggest share holder, said he had sold his entire stake after his campaign to overhaul the retailer failed.
- Goldman Sachs (GS) shares fell 3 percent to $153.23, after it was disclosed that the investment bank lost tens of millions of dollars after a computer glitch led to a flood of erroneous options trades last week, according to a source close to the matter.
- Shares of Tiffany & Co. (TIF) fell 1 percent to $80.82, with strong sales in China and higher prices partially making up for some disappointing numbers at home in the latest quarter.
- At 10 a.m. Eastern time, the National Association of Realtors releases pending home sales index for July and the Labor Department releases monthly metro unemployment data.