Stocks plunged on Thursday, extending a selloff to four days, as policymakers' failure to arrest global economic stagnation sent markets spiraling downward.
The heavy volume of Thursday's plunge signaled investors are selling in anticipation of more losses. Wall Street's fear gauge, the CBOE Volatility Index, jumped 12 percent, giving the index its biggest 2-day percentage spike in a month as investors protected against more losses to come.
Energy and materials shares were among the hardest hit areas on worries of slowing worldwide demand. Signs of a slowdown in China fed those fears.
It's tough to find anything that is a positive catalyst for the market, either domestically or internationally, said TD Ameritrade Chief Derivatives Strategist J.J. Kinahan.
The Dow Jones industrial average dropped 391.01 points, or 3.51 percent, to 10,733.83. The Standard & Poor's 500 Index lost 37.20 points, or 3.19 percent, to 1,129.56. The Nasdaq Composite Index slid 82.52 points, or 3.25 percent, to 2,455.67.
Weak data from China followed an unsettling outlook about the U.S. economy from the Federal Reserve on Wednesday in stoking recession fears. The previous session's losses were sparked after the Fed said it saw significant downside risks facing the economy.
China's once-booming manufacturing sector contracted for a third consecutive month, while the euro zone's dominant service sector shrank in September for the first time in two years.
Those searching for positive market signs could point to the benchmark S&P 500 index holding above 1,120, seen as a key technical support level which could trigger more selling if broken.
We haven't seen the market completely tilt just yet, so that does show there is some resilience. There is some fresh capital on the sideline and people aren't necessarily hitting the panic button, said Joseph Greco, managing director at Meridian Equity Partners in New York.
If we tested 1,100 -- that is where we could see a really sharp decline from there.
Volume of about 13.24 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq was well above the daily average of 7.8 billion and the highest since August 10.
U.S. crude oil futures tumbled more than 6 percent, the biggest one-day percentage drop in six weeks. For details, see
The PHLX oil service sector index tumbled 6.6. Schlumberger slid 6 percent to 61.22. The S&P materials index fell 5.5 percent, with miner Freeport-McMoRan Copper & Gold Inc off 9.7 percent to $32.14.
Banks also lost ground with the KBW bank index off 2.7. Citigroup shares were down 6.1 percent to $23.96. The Fed's plan to lower long-term rates will compress margins for banks that borrow at short-term rates and lend at longer-term rates. The declines also came a day after Moody's cut debt ratings for big lenders.
FedEx Corp, considered to be an economic bellwether, slumped 8.2 percent to $66.58 after the world's No. 2 package delivery company pared its outlook for the full year.
In addition to the statement on Wednesday, the U.S. central bank detailed additional stimulus measures to help push down long-term rates. Investors worried the latest plan would have little effect on lending and that there appeared to be few solutions to sluggish worldwide demand.
Near the close, traders exchanged about 1.10 million option contracts in the S&P 500 Index as 2.69 puts were in play for each call, according to Trade Alert. That put-to-call ratio was higher than the 22-day moving average of 1.77.
Declining stocks outnumbered advancing ones on the NYSE by 2,724 to 343, while on the Nasdaq, decliners beat advancers 2,230 to 353.
(Reporting by Chuck Mikolajczak, Additional reporting by Doris Frankel; Editing by Kenneth Barry)