The Dow fell over 300 points, continuing to spiral into bear territory after significant losses last week and earlier this month. The S&P 500 fell 38 points, and the Nasdaq dropped 65 points.
The British pound hit a record low Monday against the U.S. greenback, falling 4 percent at one point during trading.
The combination of Britain's tax cuts last week and the U.S. Federal Reserve's aggressive rate raising have collided and caused the U.S. dollar to skyrocket.
The Euro hit its lowest level against the dollars in 20 years.
A surging U.S. dollar can put a dent in the profits of U.S. multinationals, as well as complicate international trade, as many global transactions are conducted using the greenback.
In a note, Morgan Stanley's Michael Wilson, chief U.S. equity strategist, wrote that: "Such U.S. dollar strength has historically led to some kind of financial/economic crisis," as reported by CNBC.
"If there was ever a time to be on the lookout for something to break, this would be it," he wrote.
This comes after the Dow hit bear market territory on Friday, falling 800 points at one point before ending the trading day down nearly 500 points.
The Dow ended below the 30,000 mark and at one point fell to a new low for this year.
That's after the index suffered a 10 percent loss over the past month, and a year-to-date nosedive of around 19 percent.
The losses reflect investors' fears that inflation is not fading as fast as they thought, which has prompted the Fed to go on an aggressive rate raising campaign.
Moreover, investors are growing more concerned that the Fed will act too harshly and cause jobless rates to rise to crisis levels.
The Fed's aggressive hiking campaign is a bid to get a handle on the worst U.S. inflation in 40 years.
August's inflation rate came in at an 8.3 percent rise from the same time last year. The Consumer Price Index (CPI) has remained over 8 percent since March.
The Fed announced last week that it would raise rates a third consecutive 75 basis points, with Fed chair Jerome Powell expressing concern that inflation remains stubbornly high despite ongoing rate hikes.
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