At the close, the Dow Jones Industrial Average had lost 1 percent, the broad S&P 500 index 1.5 percent, and the technology-heavy Nasdaq Composite Index had fallen 2 percent.
The grim development followed falling prices in Europe and Asia.
On Friday, several media outlets reported that Washington was sending additional forces, including ground troops, to the Middle East.
At the same time, the trend for oil prices continued to point upward. At 9 p.m., Brent crude was trading at just over $111 a barrel.
"If this is an escalation that includes troops on the ground, then we're going to see this kind of market with higher gas and oil prices for at least a few more weeks," analyst Ross Mayfield told CNBC.
