Worries about the strength of a possible economic recovery resurfaced on Wall Street on Monday, shoving the Dow almost 200 points lower and to its worst day since early July.

Today’s Markets

The Dow Jones Industrial Average fell 186.06 points, or 2%, to 9135.34, the Standard & Poor's 500 dropped 24.36 points, or 2.43%, to 979.73 and the Nasdaq Composite slid 54.68 points, or 2.75%, to 1930.84. The consumer-friendly FOX 50 tumbled 17.07 points, or 2.33%, to 716.01.

Concerns about the economy were reignited Monday by a global equities selloff, disappointing guidance from home improvement retailer Lowe’s (LOW) and the largest bank failure of the year. The gloomy sentiment pushed the S&P 500 below the pivotal 1000 threshold, sent crude oil to two-week lows and China’s Shanghai Composite to its worst daily plunge since November.

“I think most of the rally is over. We rallied on the second half recovery theme. I think we’ve discounted that,” Peter Boockvar, equity strategist at Miller Tabak, told FOX Business. “Now is not the time to be piling in after a 50% rally. Stocks are the only things that become more attractive to people the more expensive they get.”

The wave of selling comes after the markets closed slightly lower last week, their first weekly decline since the second week of July. So far, the losses have put just a small dent in Wall Street’s summer surge, which was fueled by hopes of an economic recovery and pushed the Dow up 15% in just a month.

The Dow on Monday suffered its worst one-day slide since falling 223 points on July 2. Combined with Friday's modest selloff, the benchmark index is now down 263 points, or 2.8%, over the past two days, its weakest stretch since June 16. Even with the losses, the Dow is up 40% from its 12-year closing low in March. 

The vast majority of the Dow's 30 components lost ground, led by aluminum titan Alcoa (AA), Bank of America (BAC) and Caterpillar (CAT). Defensive stocks like Pfizer (PFE) and Coca-Cola (KO) edged higher. 

The Nasdaq Composite tumbled further than the broader markets, suffering its worst day since June 22, as tech giants like Amazon.com (AMZN) and eBay (EBAY) fell sharply. 

“Everybody has been waiting for some kind of pause,” said Frank Davis, director of sales and trading at LEK Securities. “We all got lost a little bit in the move and chasing money. There are still many issues to go. We’ve got a long road ahead of us.”

While the bears cheered the setback on Wall Street, the bulls said lots of cash is waiting on the sidelines to enter the markets at the first chance. 

“Retracement is always healthy in the longer-term view,” NYSE trader Jason Weisberg of Seaport Securities told FOX Business. “I still think if your long-term macro view is that we’re going higher, this is a buying opportunity.”

The selling on Monday began overseas, with Asia taking the brunt of the damage despite Japan’s first positive quarter of GDP in a year. The Shanghai Composite plunged 5.8% to two-month lows and Japan’s Nikkei 225 tumbled 3.1% as the GDP report missed expectations and traders worried about whether the growth was sustainable or just the result of stimulus spending. European markets also tumbled, closing in the red for the second straight day. 

Market sentiment on Wall Street deteriorated further when Lowe’s (LOW), the second-largest U.S. home improvement company, reported a 19% decline in profit. The company’s adjusted EPS of 54 cents per share matched the Street’s view but it forecasted weaker-than-expected profit for the current quarter and trimmed its full-year outlook.

Financial stocks were the biggest drags as Monday marked the first opportunity for Wall Street to react to the seizure of Colonial Bank (CNB) of Montgomery, Ala., which Friday became the 74th and largest U.S. bank to collapse this year. BB&T (BBT) agreed to buy $22 billion of Colonial’s assets. The news serves as a reminder of the banking jitters that sent the markets to 12-year lows in March.

The bulls failed to rally around new positive economic news. The Empire State Manufacturing survey revealed conditions for New York manufacturers improved this month for the first time in more than a year. The index soared 13 points to 12.08 in August, up from -0.55 the month before and well above the record low of -38.23 hit in March.

Energy stocks like Halliburton (HAL) and Schlumberger (SLB) were also weak, tumbling along with the price of crude oil. Crude and other commodities were pressured by economic worries and a stronger dollar. Crude fell 76 cents a barrel, or 1.13%, to $66.75 -- its lowest settle since July 29. Other commodity-related stocks like U.S. Steel (X) and Freeport-McMoRan (FCX) also fell sharply. 

Health-care stocks such as Coventry Health Care (CVH) and Cigna (CI) bucked the trend, rallying after the White House appeared willing to accept health-care reform without a public insurance option, potential good news for private insurers. 

Underscoring the flight away from stocks, bond markets rallied on Monday, pushing the yield on the 10-year Treasury note to its lowest level since July 22.

Corporate Movers

Charles Schwab (SCHW) was sued by the New York attorney general for civil fraud related to the brokerage firm’s marketing and sales of auction-rate securities. Schwab said filing any charges against it is “totally unwarranted.”

Capital One (COF) saw its shares tumble after saying 30-day delinquencies in its U.S. credit card business climbed to 4.83% in July, from 4.77% in June. The credit card company said auto-finance delinquencies rose to 9.22% from 8.89%.

Rosetta Stone (RST) plunged 27% to 52-week lows after cutting its quarterly forecast and scrapping plans for a secondary offering. The language software company now sees weaker-than-expected non-GAAP EPS of 25 cents to 27 cents for the current quarter and $1.14 to $1.18 for the year.

CIT Group (CIT) said it was able to sell $1 billion in floating-rate notes, however the majority of the tendered notes came in lower than the commercial lender had previously announced. The tendering buys the small-business lender a little more time to restructure its debt and avoid bankruptcy. 

Align Technology (ALGN) soared 27% after the orthodontic product maker reached a deal to end all pending litigation with Danaher’s (DHR) Ormco. Align said it will make a cash payment of $13 million to Ormco while Danaher will take a 10% ownership stake in Align for about $77 million.