Traders work on the floor of the New York Stock Exchange
Traders work on the floor of the New York Stock Exchange REUTERS

U.S. stocks were hammered on Thursday over fears that the global economy is in danger of slipping into recession.

The Dow Jones Industrial Average, which at one point was dowb more than 500 points, finished an extraordinary session having lost 391.01 points, or 3.51 percent, to close at 10.722.83.

Every single component of the DJIA incurred losses, with Alcoa (NYSE: AA) and DuPont (NYSE: DD) slipping almost 7 percent each.

The Dow has lost 6.74 percent over the past four days.

The S&P 500 index dropped 82.52 points, or 3.25 percent, to 2455.67.

Meanwhile, Nasdaq tumbled 37.20 points, or 3.19 percent, at 1129.56.

Investors flocked to the safety of bonds – the yield on the 10-Year Treasury declined to 1.715 percent, a record closing low; while commodities plummeted on fears of weakening global demand.

In New York, oil futures declined 6.59 percent to $80.26 per barrel; while gold fell almost 4 percent.

Not surprisingly, the stock market’s fear gauge, the VIX, jumped 17 percent to 43.65, well above the 30 level which marks the point of worry.

The financial services sector was particularly slugged as the Greek debt and credit crisis show no signs of easing, Bank of America (NYSE: BAC), already battered by toxic mortgage securities, plunged 5.02 percent; Citigroup (NYSE: C) fell 6.11 percent; and Morgan Stanley (NYSE: MS) lost 5.50 percent.

The sell-off in the Unites State followed a major bloodbath in Europe, where major indices dropped as much as 5 percent, following reports of unusually weak manufacturing data in China.

Investor sentiment was also badly bruised by a warning from the Federal Reserve that the U.S. economy faced serious risks.
Traders also were apparently impressed by Operation twist, a plan by the Fed to $400 billion from short-term Treasuries into long-term Treasuries as a way to stimulate lending.

One of the few bright spots among U.S. equities was Goodrich Corp. (NYSE: GR) which soared more than 10 percent in after United Technologies Corp. (NYSE: UTX) agreed to acquire the aircraft components manufacturer for $16.5 billion.