Stocks closed off their worst levels Thursday, but were still down sharply, following a handful of disappointing economic news and over continuing worries over the stability of euro zone banks.
All three major indexes are on track for the worst month in almost three years.
The Dow Jones Industrial Average tumbled 419.63 points, or 3.68 percent, to finish at 10,990.58, led by Alcoa , BofA and Hewlett-Packard . The Dow was down almost 530 points in its session low.
The S&P 500 sank 53.24 points, or 4.46 percent, to close at 1,140.65. Many traders are now watching 1,101 as the next support level.
The tech-heavy Nasdaq tanked 131.05 points, or 5.22 percent, to end at 2,380.43.
Despite the day's sharp plunge, all three major indexes still finished at levels higher than last Monday's closefollowing S&P's U.S. credit rating downgrade.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 40 percent to above 44.
All 10 S&P sectors were sharply lower, led by energy and materials.
Volume was heavier than usual with the consolidated tape of the NYSE at 6.12 billion shares, while 1.62 billion shares changed hands on the floor.
"Is this selloff really a surprise? The macro data continues to paint a dire fiscal future for the world—Investors are naïve to think this is a 'rough patch,'" said Todd Schoenberger, managing director of LandColt Trading. "The ingredients are in place for a prolonged period of the bears controlling this market. Investors need to proceed with caution."
Meanwhile, Zahid Siddique, portfolio manager of Gabelli Equity Trust, called today's move "an overreaction."
"We’ve always had these negative issues lingering, but nothing’s particularly new,” said Siddique.
Stocks were pressured following news that the U.S. federal and state regulators were intensifying their scrutinyof the U.S. arms of Europe's biggest banks, according to the Wall Street Journal.
