By David Benoit and Anna Hirtenstein

Big technology stocks fell Tuesday for the third consecutive trading session, sparked by growing concerns that some of the stocks seen as beneficiaries of the coronavirus pandemic have climbed too far too quickly.

The losses pulled the Nasdaq Composite index into correction territory--a drop of at least 10% from a recent high--just three sessions after setting a new record close on Wednesday. That's the fastest-ever such fall.

The index slumped 465.44 points, or 4.1%, to 10847.69 on Tuesday and extended its losses over the past three sessions to 10.03%.

Among the biggest decliners were shares of Apple, Amazon.com, Facebook and Zoom Video Communications, all of which fell more than 4%. Despite their recent losses, the stocks are still up more than 30% for the year, buoyed by the stay-home orders aimed at slowing the spread of the virus.

The S&P 500 fell 95.12 points, or 2.8%, to 3331.84, and the Dow Jones Industrial Average lost 632.42 points, or 2.2%, to 27500.89.

"I think we should start to anticipate a rotation -- the momentum behind tech is going to ease," said Seema Shah, chief strategist at Principal Global Investors.

"As we're seeing easing lockdowns and the prospect of a vaccine, people are beginning to go back to a more normal way of life and reliance on tech is starting to fade from the peak where it was at the height of the lockdown."

After six months of rallying, stocks are in the midst of their worst stretch since March, when the coronavirus pandemic grabbed hold of the economy and drove heavy selling.

Still, few investors say they believe the recent rout signals the end of a rally that has pulled the Nasdaq up 20% this year and the S&P 500 up 3.1%.

Apple alone dropped $8.14, or 6.7%, to $112.82 on Tuesday. The tech giant has fallen 14% and lost some $320 billion in market value over the past three sessions, even as it announced it an event to launch a new set of the products that have propelled it to the world's most valuable company.

Tuesday's losses extended beyond the tech industry -- all 11 sectors of the S&P 500 declined, as did 26 of the 30 components in the Dow.

Energy stocks took a beating as oil prices extended their drop on concerns demand is slumping amid a still uneven economic recovery. Saudi Arabia signaled an expectation for reduced demand over the weekend by cutting prices.

Brent crude, the global oil benchmark, fell 5.3% to $39.78 a barrel, dropping below $40 for the first time since June. U.S. crude fell 7.6%.

Among the worst-performing stocks in the S&P 500 were Apache, down 11%, or $1.56, to $13.04 and Devon Energy, down 8.9%, or $0.93, to $9.62.

Tesla, another one of the year's highflyers, had its worst day ever, down 21%, or $88.11, to $330.21. S&P Dow Jones Indices late Friday passed over the electric car maker for inclusion in the S&P 500, which many investors had bet would give the shares another lift. Its shares have fallen 34% in September -- but have roughly quadrupled in 2020.

As traders returned from the holiday weekend that typically signals the end of the summer vacation season, they said the economy and the U.S. election will be in focus, as well as the continuing pandemic.

"Typically, bubbles are unwound when the Fed takes away the punch bowl. Obviously, this is very unlikely to happen anytime soon," strategist Chris Senyek of Wolfe Research wrote Tuesday. "However, this bubble can still be unwound by sustained economic disappointments!"

Some investors sought safety in government bonds, pulling the yield on the benchmark 10-year Treasury notes down to 0.682% from 0.720% Friday.

Also weighing on markets was an uptick in economic tensions between the U.S. and China.

President Trump said in a Monday press conference that he was considering "decoupling" from China and wasn't seeking to bring outsourced jobs back to the U.S. The comments are the latest twist in a multiyear spat between the two largest economies in the world that have centered around technology, security and jobs.

"Decoupling is an economic concept, not a political concept," said Sebastien Galy, a macro strategist at Nordea Asset Management. "These have the potential to be very significant moves."

Chinese Foreign Minister Wang Yi unveiled an initiative on Tuesday seeking to set global standards on data security, in response to accusations by Washington over what the Trump administration deems to be national-security threats by Chinese companies such as Huawei Technologies and Tencent Holdings.

The Shanghai Composite Index rose 0.7%, while other major benchmarks in Asia also climbed.

In Europe, the pan-continental Stoxx Europe 600 dropped 1.1% as another round of Brexit trade negotiations between the U.K. and the European Union are set to begin on Tuesday. Prime Minister Boris Johnson has set an Oct. 15 deadline to strike a deal and tensions are expected to simmer in the final weeks ahead of the deadline.

Bucking the downward trend, shares of General Motors jumped $2.38, or 7.9%, to $32.38 after it formed a strategic partnership with battery and hydrogen-powered vehicle maker Nikola to jointly develop an electric truck. Nikola shares surged $14.50, or 41%, to $50.05.

Among other individual stock moves, Boeing fell $9.97, or 5.8%, to $161.08 after The Wall Street Journal reported Federal safety regulators are reviewing production of its 787 Dreamliner.

Fitness company Peloton Interactive rose $4.97, or 6.2%, to $85.60 after unveiling new bikes and lower prices, trying to capitalize on more home workouts.

Write to David Benoit at david.benoit@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com