The S&P 500 entered a bear market after the open on Tuesday, down over 20 percent from its 2011 high, as European officials considered making banks take bigger losses on Greek debt and fears of contagion in the world's financial system grew.

The Dow Jones industrial average <.DJI> dropped 124.12 points, or 1.16 percent, to 10,531.18. The Standard & Poor's 500 Index <.SPX> dropped 12.43 points, or 1.13 percent, to 1,086.80. The Nasdaq Composite Index <.IXIC> dropped 18.61 points, or 0.80 percent, to 2,317.22.

(Editing by Jeffrey Benkoe)