(Close): The main US share indexes all slumped on Wednesday, with the technology-focused Nasdaq sustaining the heaviest losses.
It shed 2.4%, or 118 points, to close at 4,876 as semiconductor and biotech stocks fell sharply.
The decline was the Nasdaq's biggest one-day fall since April 10 last year.
It came despite shares in Kraft Foods, which is listed on Nasdaq, soaring more than 35% after the company agreed to merge with Heinz.
The merger between the ketchup maker and the company that owns brands including Philadelphia cream cheese is set to create the third-largest food group in the US.
Microchip maker AMD fell 5.7% following a broker downgrade, while Oramed Pharmaceuticals was the biggest faller, off 19%.
On the currency markets, the dollar fell 0.5% against the euro, to €0.9114. The slide followed data showing US durable goods orders fell 1.4% in February - the third decline in four months.
"Today's report provides strong evidence that the manufacturing sector is feeling some considerable heat from the stronger dollar," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.