All 10 S&P 500 sectors ended lower, led by energy stocks, which lost 2.1 percent.
Markets were weak for most of the session, but selling accelerated in the afternoon on reports that Russian troops were massing near the Ukraine border.
"Obviously, the consensus for a long time has been that the market has been due for a correction, so it was ripe for sentiment to change very quickly," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
The S&P is down 3.4 percent from its record closing high of 1,987.98 points reached on July 24.
The energy index ended 2.1 percent lower, dragged down by concerns about oversupply of oil and disappointing results from Pioneer Natural Resources. Pioneer lost 5.6 percent and was the worst-performing S&P energy name.
Normally, tensions in oil-producing regions like Russia would boost the price of oil, but bigger worries about demand and poor margins overwhelmed those concerns.
The Dow Jones industrial average fell 139.81 points, or 0.84 percent, to 16,429.47, the S&P 500 ended down 18.78 points, or 0.97 percent, to 1,920.21, and the Nasdaq Composite lost 31.05 points, or 0.71 percent, to 4,352.84.
Declining issues outnumbered advancing ones on the New York Stock Exchange by 2,194 to 844, for a 2.60-to-1 ratio on the downside. On the Nasdaq, 1,556 issues fell and 1,116 advanced for a 1.39-to-1 ratio.
Shortly after the close, Twenty-First Century Fox, the media company controlled by Rupert Murdoch, said it had withdrawn its offer to buy Time Warner Inc. Shares of Fox jumped, gaining 7.7 percent in after-hours action, while Time Warner shares fell 11.4 percent.
Walt Disney Co reported better-than-expected earnings after the bell, but its shares were little changed from the NYSE closing price of $86.75
Earlier in the day, the market was lifted by data showing new orders for U.S. factory goods rose more than expected in June, and that a measure of growth in the services sector increased at the fastest rate in 8-1/2 years.
Target shares fell 4.4 percent to $58.03 after discount retailer cut its second-quarter earnings estimate.
Shares of solar and LED equipment maker GT Advanced Technologies rose 6.7 percent to $15.08 a day after it raised the lower end of its full-year 2014 adjusted profit forecast.
About 6.2 billion shares changed hands on U.S. exchanges on Tuesday, short of the 6.7 billion average for the last five days, according to data from BATS Global Markets.