The Dow Jones industrial average fell 1.5 percent, while the Nasdaq composite index dropped 3.3 percent. The broad S&P 500 index sank 2.1 percent.
On Tuesday, new figures showed that the American manufacturing industry is performing slightly worse than expected. The purchasing managers' index for August, which is usually a business cycle indicator, came in slightly lower than the average forecast economists had set for the month.
The technology sector had a particularly tough day on Tuesday. Semiconductor giant Nvidia, which only saw moderate declines when it published its quarterly report last week, is now falling sharply. The stock dropped 9.5 percent during the day.
Processor giant Intel, which has been struggling in recent months, also had a blood-red day on the stock exchange. The company fell 8.8 percent.
Among the winners were several traditionally defensive stocks. Food company Pepsico, for example, rose 2.7 percent, while telecom giant Verizon increased 2.8 percent.
The US stock exchange was closed on Monday due to Labor Day.
