At one point in trading today, the Dow Jones was down close to 500 points or about 4 percent. The U.S. markets followed the earlier global slide as investors grappled with a gloomy forecast from the Federal Reserve and fears of a global economic downturn.
As we reported earlier, those fears were stoked by a Fed statement issued today that "said growth 'remains slow,' 'the unemployment rate will decline only gradually' and there are 'significant downside risks to the economic outlook.'"
U.S. stocks hit successive lows throughout Thursday's session as investors sold off assets perceived as "risky" and fled to the dollar and to government bonds. The selloff started Wednesday. The Fed moved to increase the share of longer-dated Treasurys within its portfolio by $400 billion by June 2012, while selling shorter-term paper. But the planned effort, which investors dubbed "Operation Twist," was overshadowed by a gloomy statement from the central bank noting "significant downside risks" to the global economy. The Fed also noted "strains" in global financial markets, widely interpreted as a reference to Europe's sovereign-debt crisis.
A weak reading on manufacturing in China also contributed to slowdown fears. Adding to the grim mood was a lack of appreciable progress in containing Europe's debt crisis, which has weighed on markets for months.
And here's Bloomberg, rounding up the effects of the sell-off:
Stocks sank, Treasury 10-year yields slid to a record and the Dollar Index rose to a seven- month high amid concern central banks are running out of tools to prevent a recession. Oil dipped below $80 a barrel.
The other indices faced the same issues. The Standard & Poor's lost 3.9 percent, briefly dipping below its 2011 closing low, reports Bloomberg.
Update at 4:40 p.m. ET. Markets Close:
Toward, the end of the trading day, markets made a slight recovery but still ended up deep in negative territory.
The Dow closed 3.5 percent lower; the S&P closed 3.24 percent lower and the Nasdaq finished the day 3.25 percent lower.