U.S. stocks sank on Thursday, erasing all and more of the previous day's rally, as investors bypassed U.S. corporate earnings and economic reports to focus on global concerns, including Europe's softening economy.
"We've added global growth concerns on top of other headline risks, (such as) air strikes, Ebola," said Sean McCarthy, regional chief investment officer for Wells Fargo Private Bank.
Ahead of Wall Street's start, data showed a 5.8 percent drop in German exports in August, adding to downbeat numbers that had German industrial orders and output falling as well.
"Europe's growth is weak, and close to going into recessionary like conditions; everyone is waiting for the bazooka to be fired," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.
Stocks furthered their losses after European Central Bank President Mario Draghi said there are indications that the euro zone's economic growth is slowing and that central bankers should strive to boost inflation.
"To some extent we've lost the optimism that drove the markets higher over the course of the year, whether it's worry about the impact of people dying of the latest contagion, whether worry about what will happen when the Fed is no longer pumping money into the economy, or Europe and the slowing there," said Bruce McCain, chief investment strategist at Key Private Bank.
After rising to 19.38, its highest level since Feb. 6, the CBOE Volatility Index, a measure of investor uncertainty, rose 24 percent to 18.76. The Russell 2000 Index of small-cap companies fell 2.7 percent.
Gap fell sharply after the retailer tallied disappointing sales in September and said its chief executive officer would depart; PepsiCo gained after hiking its outlook, and Apple rose after Carl Icahn called on the technology company to increase its share buybacks.
The market's decline "certainly isn't any of the U.S. news; jobless claims continue to point to a sturdy labor market," Luschini said of the number of Americans filing for jobless benefits, which declined last week, with the four-month average hitting an eight-year low.
Separately, wholesale inventories rose
"We need to wipe out some valuation excess to de-rate to a level that is more indicative of this two-speed global economy, where the U.S. looks good but the rest of the world looks suspiciously weak," Luschini said.