Stocks tumbled the most in three months as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast, spurring concern the seven-month rally is outpacing prospects for an economic recovery.

The S&P 500 index slid 2.6 percent, or 27.23 points, to 1,029.85, while the Dow Jones industrial average sank 203 points, or 2.1 percent, to 9,509.28. The Nasdaq composite index declined 64.94, or 3.1 percent, to 2,057.48

Indexes opened the session lower after the number of Americans filing first-time claims for unemployment benefits climbed by 17,000 to 551,000 last week, and stocks extended losses after the Institute for Supply Management said its manufacturing index dropped to 52.6 in September.

Last October was one of the worst ever. The Dow plunged 18 percent from Oct. 6 through 10, its steepest weekly decline on both a point and percentage basis.