Broad market measures also pulled back sharply in what shaped up as the third steep selloff in the past four sessions.

The Dow lost 94.04 points, closing at 6,517.01, after sliding by more than 100 points twice during the afternoon.

Decliners outnumbered advancers by more than a 2-to-1 margin on the New York Stock Exchange, with 850 up, 1,743 down and 732 unchanged. NYSE volume totaled 478.13 million shares vs. 507.06 million yesterday.

The Standard & Poor's 500-stock list fell 9.53, or 1.25 percent, to 750.11, and is now down more than 8 percent from its all-time best close at 816.29, set Feb. 18.

The Nasdaq composite index fell 16.47, or 1.3 percent, to 1,201.00, its lowest finish since Sept. 17. The NYSE's composite index fell 4.43 to 395.37, and the American Stock Exchange composite index fell 5.08 to 561.19.

Stocks were pressured from the open by another jittery day in the bond market, where long-term interest rates flirted with another six-month high, undermining a potential follow-through to yesterday's modest rebound.

As bond prices fell today, the yield on the 30-year Treasury bond edged as high as 7.10 percent, threatening to break Monday's six-month high of 7.09 percent. Stocks started to rebound in afternoon as the long-bond yield settled back near yesterday's 7.07 percent.

Bond traders were mildly encouraged this morning after the Commerce Department reported that orders to U.S. factories rose a moderate 0.8 percent in February.

The increase was slightly below many forecasts, but coming on the heels of a robust 2.5 percent gain in January, the latest factory orders tally still represented a record high and reinforced other recent reports portraying vigorous -- and potentially inflationary -- economic activity.

The reports have aggravated concerns the Federal Reserve, which last raised one of its key lending rates to help keep a lid on inflation, will see a need to keep hiking interest rates. Rising inflation or interest rates hurts bond prices by making their fixed payoff less attractive.