The Dow fell below 10,000 Thursday for the first time since last November amid worries about the US job market and Europe's ability to get a grip on its debt.
In the final, hair-raising minute of trading, the Dow Jones Industrial Average fell below that 10,000 mark, before popping back up a few points to end at 10,002.18.
When the dust settled, the Dow lost 2.6 percent, led by Bank of America, Merck and JPMorgan. Just one of the 30 Dow components was higher — Cisco.
The S&P 500 shed 3.1 percent and the Nasdaq dropped 3 percent.
The CBOE volatility index, the market's fear gauge, spiked more than 20 percent, ending above 26.
With today's decline, the Dow is now down more than 4 percent for the year.
The selloff left a lot of anxiety in the market heading into tomorrow's session — and the jobs report. There was some buzz on the floor that this may be the beginning of a full-blown correction, which would be a 10-percent drop from January's highs. The level to watch is 1,035 on the S&P.
Global markets started the day's spiral amid worries about debt in Portugal, Spain and Greeceand those countries' abilities to get it under control.
Worries about the situation in Europe sent the dollar to a seven-month high against the euro. Oil fell to $73.14 a barreland gold fell to a three-month low, settling at $1,062 an ounce.
The U.S. fanned the flames as initial jobless claims rose by 8,000 last week to a seasonally adjusted 480,000. Economists had been expecting the gauge to drop by 10,000, according to the latest Reuters survey.
This came after a pair of reports on Wednesday that showed tepid jobs growth and one day ahead of the big jobs report from the government. Economists expect to see that 5,000 jobs were added to nonfarm payrolls in January after a loss of 85,000 in December.
Financials were among the hardest hit today.
Bank of America dropped more than 5 percent after the New York attorney general's office filed civil charges against the bank and former CEO Ken Lewis, alleging they misled investors over Merrill Lynch during the acquisition last year.
The bank is also apparently on a spending spree across Asia, hoping to take advantage of the region's accelerating growth and build the investment-banking business Merrill Lynch started.
Citigroup lost more than 5 percent, while JPMorgan and Goldman Sachs shed more than 4 percent.
Cisco was the only gainer on the Dow today, up 0.4 percent, after the networking-gear maker beat expectations for both earnings and revenue and CEO John Chambers delivered a bullish outlook.
"Our results show we are entering the second phase of the economic recovery" amid an increase in business spending on technology, Chambers said on CNBC this morning. He also said that conversations with other business leaders at Davos convinced him sentiment is turning.
"There was not a single leader that I talked with that didn't think either their business or their economy was in dramatically better shapethan just two quarters ago," Chambers said.
Toyota raised its annual forecast, despite new complaints about braking problems in its third-generation Prius, but its stock still fell more than 2 percent.
Retailers unleashed a wave of chain-store sales reports this morning — More than half beat their targets.
Macy's was a standout: The department store operator reported same-store sales rose 3.4 percent last month, topping expectations for a flat month, and raised its full-year earnings forecast. Its shares finished up 2.7 percent.
Gap , TJMaxx and American Eagle also raised their forecasts.
MasterCard shares dropped more than 10 percent after the company posted earnings results that disappointed investors.
Its main competitor, Visa, saw its shares rise after its earnings reports after the bell on Wednesday beat expectations.
Monster Worldwide is buying the HotJobs site from owner Yahoo, leaving Monster with only Careerbuilder.com as a major competitor in the online job-posting market.
Volume was heavy, with 11.21 billion shares traded on the NYSE, ASE and Nasdaq combined. Decliners outpaced advancers, roughly 14 to 1.
Still to Come:
FRIDAY: The January jobs report; G7 ministers meet; Fed's Bullard speaks; consumer credit; Earnings from Aetna and Tyson Foods
Send comments to cindy.perman@nbcuni.com.
