Crude oil and other energy contracts tumbled, a day after oil hit an 18-month high. Prices for copper and other industrial metals also fell sharply.
The declines in commodities were made worse by a spike in the dollar as investors sought safe places for their money.
The rising dollar tends to sap demand from foreign investors for commodities, which are priced in dollars.
Oil fell 4 percent, as did heating oil. Copper fell more than 3 percent, and silver prices were off nearly 5 percent. The dollar rose sharply against other currencies, especially the euro, which has been battered by the Greek debt crisis.
The ICE Futures US dollar index, which measures the dollar against six other currencies, jumped 1.2 percent to 83.26.
The seemingly endless saga of finding a solution for Greece's debt crunch has unnerved investors, sending stock prices down around the globe Tuesday. The Dow Jones industrial average was down as much as 283 points, its biggest drop since Feb. 4, before it closed down 225.
“There seems to be a wholesale run for the exit for risky assets,” said Evan Smith, co-manager of US Global Investors' $800 million Global Resources Fund. “It appears to be concerns about Greece and the impact on the euro zone. We thought that fire had been put out, but it keeps reigniting, it seems.” European nations agreed to a bailout package for Greece over the weekend, but street protests broke out in Athens Tuesday as unionists opposed the sweeping budget cuts the country agreed to in order to qualify for the aid. Standard and amp; Poor's downgraded Greece's debt to junk last week and also lowered its ratings on debt issued by Spain and Portugal, confirming fears that Europe's sovereign debt woes were spreading.
Copper's decline was made worse by another factor: China.
Beijing imposed more restrictions on its banks, leading investors to worry that its hunger for copper, oil and other industrial commodities might wane as its economic growth moderates. July copper dropped 11.5 cents to $3.1785 a pound.
Other metals also tumbled.
Platinum fell $43.10 to settle at $1,685.80 an ounce, while palladium for June delivery fell $33 to $515.25 an ounce. Both are used in making catalytic converters for cars and therefore respond to shifts in sentiment about economic growth.
July silver fell 99.8 cents to $17.842 an ounce. Gold was the least hurt among metals in the selloff, falling $14.10 to settle at $1,169.20 an ounce.
In energy trading, crude oil prices dropped $3.45, or 4 percent, to settle at $82.74 on the New York Mercantile Exchange.
Crude had traded at its highest level in a year and a half on Monday. Oil prices are also taking a hit from growing crude inventories, which may have gained an additional 1.5 million barrels last week, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
In other Nymex trading in June contracts, heating oil fell 8.56 cents to settle at $2.2595 a gallon, and gasoline lost 11.29 cents to settle at $2.3222 a gallon. Natural gas added 1.3 cents at $4.013 per 1,000 cubic feet.
Agricultural commodities were mixed. Wheat for July delivery rose 9 cents to settle at $5.1075 a bushel. June soybeans rose half a cent to $9.87 a bushel, while corn fell 2.5 cents to $3.69 a bushel.
