Concerns that the global economy is weakening prompted a global rout Thursday as international stocks joined U.S. securities in a massive plunge.
U.S. stocks dropped, with the Standard & Poor's 500 Index suffering its biggest drop since February 2009 and the Dow experiencing its steepest decline since December 2008.
And global stocks had their biggest one-day rout since March 2009. A measure of global equities fell more than 10 percent from this year's high in May, entering a correction amid concern about a recession. The MSCI All-Country World Index of stocks in developed and emerging markets slid 4.1 percent to 311.60, falling 13 percent from its May 2 high.
Only three out of the 500 stocks in the S&P benchmark measure of American equities rose. Losses exceeded 10 percent for 13 of the companies, including Alpha Natural Resources Inc. and Gap Inc., which fell after the retailer's sales missed estimates.
All 10 S&P 500 groups slumped, led by losses topping 5.3 percent for energy, material and industrial shares. Chevron Corp. and Alcoa Inc. fell more than 5.7 percent as Japan sold its currency, driving down commodities priced in dollars.
The S&P 500 decreased 4.8 percent to an eight-month low of 1,200.07. It has retreated 11 percent since July 22, the biggest loss over the same amount of time since March 9, 2009, when the bull market began.
The Dow Jones Industrial Average declined 512.76 points, or 4.3 percent, to 11,383.68, erasing its 2011 gain. Almost 14 billion shares changed hands on U.S. exchanges, 90 percent higher than the three-month average.
"It's unbelievable," said David Joy, chief market strategist at Ameriprise Financial, which oversees $693 billion in assets. "The emotional aspect of this is ticking higher. It's left everybody with this mindset that things are not good. The situation in Europe is getting everyone concerned. We had the impact of the Japan intervention in the currency market. The flight-to-quality trade is going to pick up."
Stocks tumbled from Hong Kong to London and Sao Paulo as the yen dropped by the most since October 2008 against the dollar after Japan sold its currency to stem gains that threaten the nation's economic recovery. The euro fell against the dollar after European Central Bank President Jean-Claude Trichet said policymakers will offer banks additional cash to ease tensions in financial markets.
"The mood right now is gloomy," said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, which oversees $774 billion. "The burden of proof is for better data that show the economy is not falling into recession."
U.S. stocks had risen Wednesday amid speculation the Federal Reserve may consider another economic stimulus to avert a recession. The Fed finished its second round of so-called quantitative easing at the end of June.
Meanwhile, economists expect a Labor Department report today will show that employers added 85,000 workers in July, failing to reduce a jobless rate holding above 9 percent.
"Friday's payroll report is crucial," Ryan said. "If we see another disappointment, the stock market will have significant downside from here."