* Copper prices hit 3-week low, oil down about 2 pct
* All 30 Dow components and 10 S&P sectors down
* Volatility index jumps 14 pct
* Goldman falls after CEO discloses he has cancer
* Indexes down: Dow 1.37 pct, S&P 1.47 pct, Nasdaq 1.82 pct (Updates to early afternoon)
By Tanya Agrawal
Sept 22 (Reuters) - Wall Street was more than 1 percent lower on Tuesday afternoon amid a decline in commodity prices and continuing uncertainty about when the Federal Reserve will raise interest rates.
The selloff was broad-based. All 30 Dow components declined. All 10 major S&P sectors were lower, led by a 2.2 percent drop in the materials index and a 1.9 percent fall in technology stocks.
Copper prices hit a three-week low, while oil was down about 2 percent on persistent worries about demand, especially in China.
The Fed last week kept rates at near-zero levels, citing the turbulence in a tightly linked global economy, including slowing growth in China. But, Atlanta Fed President Dennis Lockhart said on Monday a rate hike later this year was still possible.
Trading has remained volatile as investors try and gauge the timing of a rate hike. The CBOE Volatility index, known as the "fear gauge", jumped 14 percent to 22.98, above its long-term average of 20.
While 13 of the 17 Fed policymakers still foresee raising rates at least once in 2015, traders are pricing in only a 41 percent chance that the central bank will move in December.
"The potential that the Fed may delay rate hikes until next year will provide even more angst for the markets ... the longer the delay, the greater the potential for an accelerating rate hike schedule," said Tom Stringfellow, chief investment officer at Frost Investment Advisors.
At 12:42 ET (1642 GMT) the Dow Jones industrial average was down 226.25 points, or 1.37 percent, at 16,283.94. The S&P 500 was down 28.93 points, or 1.47 percent, at 1,938.04 and the Nasdaq composite was down 87.96 points, or 1.82 percent, at 4,741.00.
The S&P 500 index, which is 9 percent lower than its record-high in May, has seen moves of at least 1 percent in more than 12 sessions since Aug. 20 as investors fretted over a China-led global economic slowdown and the looming rate hike.
"Investors are nervous because there is a sense that the Fed knows more than it is letting on regarding the health of the global economy," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
Now, investors once again will peruse statement from Fed officials for further clarity on the reason behind their decision and when rates will be increased.
Atlanta Fed President Lockhart is scheduled to speak again later on Tuesday. Fed Chair Janet Yellen speaks on Thursday.
The dollar hit an almost two-week high against a basket of currencies on Tuesday on revived expectations that rates could still be hiked later this year.
Apple was down 2 percent at $112.86, leading the decline in tech stocks and was the biggest drag on the S&P and the Nasdaq.
Goldman Sachs fell 2.7 percent to $178.43 and was the biggest drag on the Dow after Chief Executive Lloyd Blankfein said he had a "highly curable" form of lymphoma.
Shares of Volkswagen suppliers BorgWarner, Honeywell and Delphi Automotive were down between 2.2-7.5 percent after the German carmaker admitted to cheating on vehicle emission tests.
Mosaic slumped 7.2 percent to $33.83, the top drag on S&P materials index, after the fertilizer maker cut its quarterly sales forecast.
Biotech stocks fell for a second day after Democratic presidential candidate Hillary Clinton said she would propose a $250 monthly cap on prescription drugs.
The Nasdaq biotechnology index was down 2.6 percent. Gilead and Biogen were both down about 1 percent.
Declining issues outnumbered advancers ones on the NYSE by 2,463 to 514. On the Nasdaq, 2,194 issues fell and 522 advanced.
The S&P 500 index showed one new 52-week high and 33 new lows, while the Nasdaq recorded 11 new highs and 100 new lows. (Reporting by Tanya Agrawal in Bengaluru; Editing by Savio D'Souza)