This story was updated at 4:21 p.m. EST.

The world woke up Thursday to a spreading sea of red in global markets that started in Asia and continued as opening bells for trading floors rang westward. Investors fled to safe-haven assets amid worries about the health of the global economy.

Jitters were exacerbated when Sweden announced it would push interest rates deeper into negative territory and investors put European banks to the forefront of their concern, with bad memories of previous periods of financial stress.

The Dow Jones Industrial Average (INDEXDJX:.DJI) closed down 254.56 points, or 1.6 percent, on Thursday, to 15,660.18. The broader Standard & Poor's 500 index (INDEXSP:.INX) dropped 22.78 points, or 1.23 percent to 1,829.08. The Nasdaq composite (INDEXNASDAQ:.IXIC) fell 16.75 points, or 0.39 percent to 4,266.84.

Safe-haven bets sent U.S. Treasuries to their lowest level in more than three years while gold jumped to its highest price in a year. U.S. oil prices continued their march toward a 13-year low.

“The fear is coming from four or five buckets of things – some are real and some are story lines – that’s giving a lot for investors to juggle,” said Brian Fenske, managing director of trading at ITG Investment Research. “It’s an investor confidence issue with some real macroeconomic concerns. But not many of these concerns are related to business fundamentals.”

Fenske pointed to prognostication about the future of the eurozone, weakness in financial and technology stocks, and concern over what will happen when Chinese mainland stock markets reopen on Monday following a weeklong holiday (Lunar New Year). The plunge in oil prices over the past year is beginning to raise concerns about distressed corporate debt in the energy sector, too, which could lead to a wave of bankruptcies. These worries have boosted activity in the distressed corporate debt markets.

​On Thursday, the MSCI all-country index -- a global stock-market benchmark -- fell into a bear market, down almost 20 percent from its record high in May. 

“We are looking very carefully a global financial markets and economic developments and we are evaluating them,” Federal Reserve Chair Janet Yellen said Thursday morning during a semiannual policy hearing with the Senate Banking committee.

All 10 S&P 500 sectors closed down Thursday led by financials and materials stocks. Boeing Co. (NYSE:BA), Goldman Sachs Group Inc. (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) led Dow declines. Cisco Systems Inc. (NASDAQ:CSCO) and Walt Disney Co. (NYSE:DIS) led gains.

Safe Harbor Bets

The benchmark U.S. 10-year Treasury yield touched 1.532, its lowest since August 2012 on Thursday morning, but climbed up to 1.647 by the closing bell. The bond yield typically rises when investors are more confident about the markets and falls when concerns flare. Gold, another so-called safe-harbor investment, gained 5.1 percent to $1,255.60 per troy ounce, around its highest level since last February. Gold prices tend to rise as confidence in the markets falls.

Oil Prices

Oil prices continued to plunge Thursday morning after the International Energy Agency said this week that there’s no relief to the global glut in sight for the year. But Brent crude prices rebounded by the closing bell after a report some OPEC members are trying to drum up support for a halt in production to trim the global supply glut.

U.S. West Texas Intermediate dropped 1.49 percent to $27.04 per barrel for March delivery on the New York Mercantile Exchange. Brent crude, the other major global benchmark, gained 0.6 percent to $31.02 for April delivery on the London ICE Futures Exchange.

Global Markets

The Hong Kong stock market woke up from its Lunar New Year holiday to investors resuming last week's sell-off. The Hang Seng index lost 3.9 percent by the end of Thursday's session. China’s mainland stock exchanges remain closed for the rest of the week. Japan's stock market was closed Thursday for the holiday. 

In Europe, weak corporate earnings and Sweden’s dip deeper into negative interest rate territory – a desperate and increasingly common move by central banks across the globe – helped to send markets down by the closing bell. The broad Stoxx Europe 600 index shed 3.45 percent. The Paris-based CAC 40 closed down 4 percent, while London’s FTSE fell 2.4 percent. Frankfurt’s DAX retreated 2.9 percent.