The U.S. stock market tumbled further Monday, hitting session lows, after President Barack Obama addressed the nation about Standard & Poor's downgrade.

At 2:30 p.m. Monday, the Dow was down 538.26 points, or 4.89 percent, to 10,906.35, the Nasdaq was down 153.03 points, or 6.05 percent, to 2,378.54, and the S&P 500 was down 5.95 percent, or 71.42 points, to 1,129.079.

The drop Monday follows Wall Street's worst week since March 2009, during the recession.

Also, the CBOE Volatility Index, considered by many the best guage of fear in the markets, rose above 40 for teh first time since May 2010.

Bank of Amerca was the worst performing Dow stock, dropping more than 21 percent, or $1.75, to $6.41 by 2:30 p.m. The bank's stock was falling in the downgrade aftermath with other financial stocks, but it was also hit hard by news that AIG is suing Bank of America over mortgage-backed securities losses.

Also dragging on the markets was news Monday that S&P has downgraded Fannie Mae and Freddie Mac and several other agencies that rely upon the federal government's ability to pay its debt.

Obama addressed the nation Monday afternoon to address the downgrade and the markets, already in steep decline, dropped further after his statement to calm fears.

"The fact is," Obama said, "we didn't need a rating agency to tell us we need a balanced, longer-term approach to deficit reduction: That was true last week, that was true last year, that was true the day I took office..."