The Dow fell 128 points, or 1 percent, to 12,253. The S&P 500 fell 12, or 0.9 percent, to 1,312. The Nasdaq composite sank 29, or 1.1 percent, to 2,742.
Markets also fell in Asia and Europe after Japan raised the severity of the crisis at its crippled nuclear plant to the same level as the 1986 Chernobyl accident. The plant in northern Japan was damaged in the March 11 earthquake and tsunami disaster.
"It means slower growing coming out of Japan in the short term, and that's going to weigh on global growth," said Peter Cardillo, chief market economist at Avalon Partners Inc.
Japan's Nikkei 225 index fell 1.7 percent. The British FTSE 100 index, French CAC-40 index and German DAX index all dropped more than 1 percent.
Alcoa fell 5 percent to $16.87 after the aluminum maker's first-quarter revenues fell short of expectations. Alcoa, one of the 30 companies that make up the Dow Jones industrial average, is traditionally the first large company to report earnings.
Other big companies reporting results this week include JPMorgan Chase & Co., Google Inc. and Bank of America Corp.
The energy industry fell the most of the 10 that make up the S&P 500 index. It dropped 2.8 percent, more than double the percentage loss of any other group, after oil prices fell 3.2 percent to $106.35 per barrel. Goldman Sachs, which had been bullish on oil prices, surprised the market with a report early Tuesday saying it now expects a "substantial pullback."
Slot machine makers dropped after WMS Industries Inc. warned that its latest earnings will fall short of expectations. WMS sank 15.6 percent to $30.56. Rival International Game Technology dropped 5.2 percent to $15.06.