Renewed fears of an economic slowdown in Europe and Asia have injected a note of fear into what had been some complacent markets, leading to a sharp sell-off in stocks Thursday.
One day after a rally Wednesday, stocks in the United States slumped 2 percent.
Investors around the world have been selling riskier assets, like stocks and oil, and seeking out safe havens, like Treasury bonds and gold, leading to levels of volatility that have not been seen since early this year. The Standard & Poor’s 500-stock index went two months this summer without a daily move of 1 percent or more; there have been six in the last two weeks.
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The gloom has been building in recent days as economic data pointed to sluggish growth, or even contraction, in big economies like Germany and Japan.
The United States has been one of the few bright spots in the global economy. A new report on unemployment claims released Thursday bolstered recent hope that the job market is continuing to improve, albeit unevenly.
But troubles in the rest of the world could lead to a rocky road ahead for US exporters, and particularly for the energy industry, which has been one of the biggest engines of growth for the nation’s economy.
The energy sector was hit the hardest in Thursday’s stock sell-off as the price of crude oil fell 1.5 percent.
“What’s changed is that investors seem to be suddenly putting more weight on what’s going on in the rest of the world, and it isn’t pretty,” said Ed Yardeni, the founder of an economic consulting firm.
The Dow Jones industrial average dropped 334.97 points, or 1.97 percent, to 16,659.25 on Thursday. The broader S&P 500 fell 40.68 points, or 2.07 percent, to 1,928.21. The Nasdaq composite index fell 2.02 percent, to 4,378.34.
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The damage, though, has been much worse in the rest of the world, and particularly in Europe. During the last few years, European stocks have been some of the most popular investments as traders bet on an economic recovery from the financial crisis on the Continent. But most of the gains made in those markets this year have been lost in recent weeks. The leading German stock index is now down to its lowest level since late 2013.
The Federal Reserve appears to be waiting to draw back its own energetic stimulus programs, according to notes released Wednesday from the central bank’s most recent meeting. Those notes initially led stocks up, as investors bet that the central bank would provide support for the economy for longer than expected.
But on Thursday, many strategists were focusing instead on concern in the Fed minutes about the potential for slowing growth in Europe and China to hurt US companies.
The assumption that central bankers will be forced to buy more bonds to inject more money into the economy has helped the bond markets, already the beneficiary of a flight to safety.