As tensions mount over Syria's use of chemical weapons in a domestic strike, a closely watched monthly housing index showed U.S. home prices still rising, but at a slower pace in June compared to May.
On Wall Street, the Dow Jones industrial average gave up 170.33 points or 1.14 percent to close at 14,776.13. The Standard & Poor's 500 closed at 1,630.48, off 26.30 points or 1.59 percent.
The Nasdaq exchange shed 79.05 points or 2.16 percent to 3,578.52.
On the New York Stock Exchange, 620 stocks advanced and 2,481 declined on a volume of 3.2 billion shares.
The Nikkei 225 index in Japan dropped 0.69 percent or 93.91 points to 13,542.37.
The FTSE 100 index in Britain shed 0.79 percent or 51.13 points to 6,440.97.
In India, stocks fell hard as the rupee fell to a record low against the dollar Tuesday. The Sensex stock listing dropped 3.18 percent to 17,968.07, losing 590.05 points, as the rupee hit a record 66.08 against the dollar before closing at 66.24.
The 10-year benchmark U.S. treasury bond was up 21/32 to yield 2.713 percent.
The euro fell to $1.3395 while the dollar fell to 97.02 yen.
In after hours trading, crude oil on the New York Mercantile Exchange added $2.95 to reach $108.88 per barrel, a high unseen since March 2012.
On the Comex division, gold added $22.30 to reach $1,415.40 per troy ounce, up 1.5 percent. Silver gained 48 cents to reach $24.535 per ounce, up 2 percent.
On the Chicago Board of Trade, December delivery corn dropped 14 1/4 cents to $4.86 1/4 per bushel. Soybeans for November lost 16 1/2 cents to $13.73. Wheat for December shed 3 3/4 cents to reach $6.63.