Investors dumped U.S. stocks across the board on Thursday, pushing the S&P 500 and the Dow Jones industrial average down more than 10 percent for the year, on fears over the health of the global economy.
At its lowest on Thursday, the Nasdaq was 19.34 percent lower than its peak closing high on July 20, and about 35 points shy of being confirmed in bear territory.
The S&P financial sector .SPSY, already the worst performer among the 10 major sectors on the index, led the rout with a 3.23 percent decline, its steepest drop since Sept. 1.
The rout in financial stocks is being led by banks as investors fear that the negative interest rates employed by a growing band of central banks to spur economic growth is now part of the problem rather than the solution.
U.S. Federal Reserve Chair Janet Yellen said on Thursday that the central bank is looking at negative interest rates after saying the weakened global economy and steep slide in U.S. equity markets is tightening financial conditions faster than the Fed wants.
"It's a very difficult market right now. Clearly, anything perceived as a risk asset is being sold down," said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.
"The bigger issue ... what, in my mind, is driving all this selloff is that markets are losing confidence in central banks' ability to act as an effective referee," he said.
Globally, stocks fell sharply. The dollar hit a 16-month low against the yen and investors bought gold and top-rated bonds. U.S. Treasury security yields plunged to levels not seen since 2012 in some cases.
At 12:48 p.m. ET (1748 GMT), the Dow Jones industrial average .DJI was down 345.37 points, or 2.17 percent, at 15,569.37.
U.S. bank stocks, like their European peers, took a severe beating. The S&P 500 bank index .SPLRCBKS was down 4.54 percent, led by Bank of America's (BAC.N) 7 percent fall.
Boeing (BA.N) tumbled 11 percent to $103.78, hit by a report that regulators are probing the planemaker's accounting. The stock was the biggest drag on the Dow, responsible for more than a fourth of the index's decline.
At the other end of the Dow was Cisco (CSCO.O), up 9.1 percent at $24.55 after reporting a bigger-than-expected profit. The stock was one of only two gainers on the Dow and gave the biggest boost to the S&P 500 and the Nasdaq.
Declining issues outnumbered advancing ones on the NYSE by 2,664 to 409. On the Nasdaq, 2,040 issues fell and 674 advanced.
(Reporting by Abhiram Nandakumar in Bengaluru, additional reporting by Marcus Howard in New York; Editing by Savio D'Souza)
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Updated Date: Feb 12, 2016 00:15 AM