The Associated Press

NEW YORK—Wall Street lost more ground in extremely volatile trading Monday, as investors recoiled at a cautious economic outlook from a Federal Reserve official and the possibility of more financial troubles of Fannie Mae and Freddie Mac.

The market found only slight solace in retreating oil prices.

San Francisco Federal Reserve President Janet Yellen said in a speech the financial markets remained fragile, and that it will take time for conditions to improve. “My expectation is that market functioning will improve markedly by 2009,” she...