U.S. stocks fell 1 percent on Monday as the effects of Japan's earthquake and tsunami sparked caution on Wall Street, which is likely to see more volatility in the near term.
The benchmark Standard & Poor's 500 fell to its lowest in six weeks, following sharp losses overseas. European shares hit their lowest level in three months.
When in doubt, sell, said Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey.
Because investors are unsure, there is nervousness and the desire for safety, he explained. So some selling is going on just on that basis, he said.
The Chicago Board Options Exchange volatility index <.VIX>, or VIX, jumped 12.6 percent, another sign investors are worried by uncertainty.
Among shares most affected were those in the nuclear industry after explosions and damage at Japanese nuclear plants created doubts about the prospects of the industry.
In addition, shares of luxury goods companies worldwide were hit. Japan accounts for 11 percent of global luxury sales.
Stocks have rallied sharply since the start of September, with the S&P 500 still up 23 percent since then, but the market has faltered in the last two weeks.
A second hydrogen explosion rocked a stricken nuclear power plant in Japan, sending authorities scrambling to avert a meltdown.
General Electric Co , which has combined nuclear ventures with Hitachi Ltd <6501.T>, dropped 4.1 percent to $19.53.
The Japan disaster will likely delay the development of new nuclear plants in the United States, said Peter Sorrentino, a senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds GE shares.
Nuclear power probably gets extended off further into the future, Sorrentino said. Still, concerns about the disaster will weigh GE shares in the short term, he said.
The Market Vectors uranium and nuclear energy exchange traded fund slipped 13.5 percent, while the Global X Uranium ETF fell 18.6 percent.
U.S. luxury shares were hurt, including Tiffany , which dropped 5.9 percent to $59.45.
Among insurers, shares of Aflac Inc lost 4 percent to $53.35, while AIG fell 1.1 percent to $36.93.
The Dow Jones industrial average <.DJI> was down 138.28 points, or 1.15 percent, at 11,906.12. The Standard & Poor's 500 Index <.SPX> was down 17.18 points, or 1.32 percent, at 1,287.10. The Nasdaq Composite Index <.IXIC> was down 30.61 points, or 1.13 percent, at 2,685.00.
As nuclear energy stocks dropped, shares of solar energy-related companies rose. MEMC Electronic jumped 13.1 percent to $13.59.
Japanese stocks fell 6.2 percent <.N225> as investors expected the disaster to take an economic toll.
Japanese ports handling as much as 7 percent of the country's industrial output sustained major damage, disrupting global supply chains and causing billions of dollars in losses, industry officials said.
U.S.-listed shares of Japanese companies also declined. Toyota Motor Co <7203.T>, which said it would suspend production at all its Japanese car plants, fell 5.1 percent to $81.31. The iShares MSCI Japan index exchange traded fund sank 8.4 percent.
(Reporting by Caroline Valetkevitch; Additional reporting by Edward Krudy and Scott Malone in Boston; Editing by Kenneth Barry)