KOSPI falls more than 3 percent on May 19 and slips back to the 7,270 level. Investor sentiment appears to have weakened again as a decline in U.S. semiconductor shares the previous day, the burden of rising U.S. 10-year yields, caution ahead of Nvidia earnings and the April FOMC minutes later this week, and concerns about overheating and crowding in the domestic market overlap.

KOSPI closes down 244.38 points, or 3.25 percent, at 7,271.66. The index opens down 90.38 points, or 1.20 percent, at 7,425.66 and rises as high as 7,446.57 during the session, but then extends losses and at one point slides to 7,141.91.

By investor type, individuals and institutions post net buying of 5.6312 trillion won and 526.4 billion won, respectively, while foreigners log net selling of 6.2622 trillion won. Foreigners extend net selling for a ninth straight session. Net sales over the period total 41.8023 trillion won.

Experts say implied volatility in the market has increased as individuals chased gains during a recent surge in the KOSPI, while foreigners responded by selling cash equities and building short positions in derivatives.

Most top market-cap stocks fall. Samsung Electronics closes at 275,500 won, down 1.96 percent, and SK Hynix falls 5.16 percent to 1,745,000 won.

SK Square falls 6.68 percent, Hyundai Motor drops 8.90 percent, LG Energy Solution loses 1.96 percent, Samsung Electro-Mechanics slips 4.27 percent, Doosan Enerbility falls 5.44 percent and HD Hyundai Heavy Industries declines 2.76 percent.

Hanwha Aerospace, however, rises 4.81 percent.

The Kosdaq ends down 26.98 points, or 2.43 percent, at 1,084.11.

In Seoul's foreign exchange market, the won stands at 1,507.80 per dollar, down 15.80 won.

Han Ji-young (한지영), an analyst at Kiwoom Securities, says U.S. semiconductor shares such as Micron were weak after comments related to Seagate, citing the CEO's mention of a bottleneck. She says selling pressure increased as the burden of rising U.S. 10-year yields coincided with caution ahead of major events.