The Dow Jones index closed 12.9% down after President Donald Trump said the economy "may be" heading for recession.
London's FTSE 100 ended 4% lower, and other major European markets saw similar slides.
On Sunday, the US Federal Reserve cut interest rates to almost zero and launched a $700 billion stimulus programme.
It was part of co-ordinated action announced alongside the eurozone, the UK, Japan, Canada, and Switzerland.
Worries mounted that central banks' emergency measures over the weekend meant the economy is in much worse shape than previously believed.
However, investors are worried that central banks now have few options left to combat the impact of the pandemic.
The new governor of the Bank of England, Andrew Bailey, has pledged to take "prompt action again" when necessary to stop the damage to the economy from the coronavirus pandemic.
David Madden, a market analyst at CMC Markets, said that while central bankers were trying to calm the markets, "in reality it is having the opposite effect".
"The radical measures have sent out a very worrying message to dealers, and that is why they are blindly dumping stocks."
In New York, steep falls as markets opened triggered another automatic halt to trading, which is meant to curb panic selling. Before last week, such halts, known as circuit breakers, had not been used in more than two decades.
首先，熔断机制的英文是circuit breaker mechanism，其中，circuit breaker在电工学里就是断路器的意思。当电路中出现短路时，断路器会立即断开电路，保护负载的安全。
►The circuit breaker mechanism refers to measures adopted by stock exchanges to temporarily halt trading to avert panic selling after the stock index has fallen a certain percentage.
►The circuit breaker mechanism aims to check abnormal prices wings.
业内人士表示，熔断机制可以给市场一个冷静期(cooling-off period)，让投资者充分消化市场信息(market information)，防止市场或某一产品非理性的大幅波动(fluctuations)，特别防止市场大幅下跌甚至发生股灾(stock market crash)，以维护市场的稳定。
Traders work on the floor of the New York Stock Exchange (NYSE) near the close of trading in New York, US, March 12, 2020. [Photo/Agencies]But the sell-off continued after the 15-minute suspension, with the Dow losing nearly 3,000 points or 12.9%, its worst percentage drop since 1987.
The wider S&P 500 dropped 11.9%, while Nasdaq dropped 12.3%. All three indexes are now down more than 25% from their highs.
In London, firms in the travel sector saw big falls. Share in holiday firm Tui sank more than 27% after it said it would suspend the "majority" of its operations. BA-owner IAG fell more than 25% after it said it would cut its flight capacity by at least 75% in April and May.