The benchmark fell 3.4 per cent to 1,699 points, its lowest close since May 21.
"There's a lot of negative reports about corporate earnings from the United States and markets probably run ahead of themselves, given that the rally was based on volumes rather than earnings," Matthew Wakeman, EFG-Hermes managing director for cash and equity-linked trading.
"This can't be sustainable unless we get some solid earnings to justify the move higher."
Emaar Properties fell 7.3 per cent to take its losses to 25.2 per cent since announcing merger plans late last month. Dubai Financial Market dropped 7.4 per cent and Deyaar slid 4.1 per cent.
Commercial Bank of Dubai (CBD) is the only stock to advance after the lender said it was not exposed to troubled Saudi conglomerates Saad Group and Ahmad Hamad Algosaibi Bros.
CBD climbed 4.5 per cent after 2,835 shares changed hands.
Meanwhile, Abu Dhabi's index closed lower for the fourth straight session as energy and property stocks weighed.
The benchmark fell 1.4 per cent to 2,581 points.
"There's little contribution from regional or international institutions and so the market's largely driven by panicking retail investors," says Chamel Sahmy, Beltone Financial regional senior sales trader.
Aldar Properties and Sorouh Real Estate lost 3 and 3.8 per cent respectively.
Abu Dhabi National Energy Co (Taqa) fell 4.8 per cent and Dana Gas dropped 3.8 per cent.
"Dana is not doing that badly given the current market situation and is considered a defensive stock with oil prices holding above $60," said Sahmy.
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