Stocks came off their worst levels, but still finished sharply lower Thursday in heavy-volume trading as a gloomy outlook from the Federal Reserve in addition to ongoing economic jitters fueled concerns of a recession.
The Dow Jones Industrial Average plunged 391.01 points, or 3.51 percent, to finish at 10,733.83, led by United Tech , Caterpillar and Alcoa , but still finished above its August closing low of 10,719.94. The blue-chip index skid 528 points in its intraday low.
The blue-chip index is on track for its worst week in almost three years.
The S&P 500 plummeted 37.20 points, or 3.19 percent, to close at 1,129.56 after flirting with its key technical support level of 1,120. The Nasdaq declined 82.52 points, or 3.25 percent, to end at 2,455.67.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, soared above 41.
All 10 S&P sectors finished firmly in the negative territory, led by materials and energy.
“The near-term trading range for the S&P at 1,100 to 1,220 has just been a consolidation pattern, which is likely to see further downside below 1,100,” said Michael Sheldon, chief market strategist at RDM Financial Group. “If we break below that level on heavy volume, then we could be in for further downside near 1,020—that would represent a 50-percent retracement of the bull market from Mar. 2009.”
The Fed announced it would launch a new $400 billion program in a move to rebalance its $2.87 trillion portfolio—a version of the widely expected Operation Twist—by selling shorter-term notes and using those funds to purchase longer-dated Treasurys.
Despite the latest attempt to kickstart growth that slowed to a crawl over the first half of the year, the global markets remained unimpressed.
“You have to be a little bit schizo here—there’s what the Fed’s doing and there’s the overwhelming news coming out of Europe and those two things are playing against each other,” Kevin Ferry of TheContrarianCorner.com told CNBC.
“Look at the currency market, they’re tighter today than they were prior to the Fed’s activities and the Fed’s motions yesterday were aggressive," continued Ferry. "So there’s been a downtick in the mood here and it’s important to see how this plays out.”