The bottom fell out from the U.S. stock market on Thursday with major indexes down about 2 percent on worries about the housing market and corporate credit.
The Dow Industrial average of 30 blue-chip stocks closed down 311.5 points, at one point losing 449.8 points. It was the Dow's second worst performance this year after Chinese markets dropped precipitously in February.
The broader S&P 500 lost 35.43 points to reach 1,489 after bottoming out at1,465 earlier in the day.
The Nasdaq composite index fell 48.8 points to 2,599 after a low of 2,563.8.
Concern over the housing market was fueled by figures from the Commerce Department showing that sales of single-family homes fell 6.6 percent to a seasonally adjusted rate of 834,000 units.
Corporate lending worries also weighed on investors as signs appeared that the wave of private-equity buyouts may be coming to an end. Banks may be retreating from financing some deals. On Wednesday, bankers for Chrysler Group put off a $12 billion debt offer, as investors refused to buy the loans.