The Dow Jones industrial average fell 57.70 to 5,647.28, its biggest drop since the big market downturn in mid-July.
Declining issues outnumbered advancers by 1,507 to 850 on the New York Stock Exchange. NYSE volume totaled 338.35 million shares vs. 312.16 million yesterday.
Broader market measures showed steep losses, too.
The NYSE composite fell 2.51 to 352.62, and the S&P 500-stock index declined 5.57 to 660.20. The Nasdaq composite sank 12.53 to 1,125.74, and the American Stock Exchange's market value index fell 2.73 to 549.79.
Before the markets opened, the Commerce Department reported that consumer prices rose 0.3 percent in July, slightly above expectations, as falling energy costs failed to offset price jumps in food and housing.
Many analysts had expected a 0.2 percent gain in the Consumer Price Index, which was being watched closely in advance of the Federal Reserve's Aug. 20 meeting on interest rate policy.
The government also reported that retail sales edged up 0.1 percent last month.
After the reports, the price on the 30-year Treasury bond fell, sending its yield to 6.78 percent, up from 6.68 percent late yesterday.
The rising yield and the increased worry over a possible Fed rate hike helped pulled down stocks.