NEW YORK (CNNMoney) — If the stock market were a transatlantic flight, the ride just went from uncomfortably bumpy to white-knuckle turbulence.
The Dow plunged as much as 334 points on Thursday, leaving it on track for its worst day of the year. It has since rebounded a bit — it’s “only” down around 300 points now — but that’s little consolation to investors.
October is shaping up to be a scary month for anyone with money in the market, but the bigger issue is that whiplash is back. Already this month, there have been five days with major market moves where the Dow has sung up or down more than 200 points. Wednesday was actually the best day of the year so far for stocks.
What’s behind all of this volatility? Market moves aren’t always logical, but it’s clear that Investors are growing increasingly nervous about the fate of the European and Chinese economies. And they don’t know how that will change the Federal Reserve’s plans to remove the easy-money punchbowl.
“Once this market picks a direction, there are very few players who get in the way. It tends to just feed on itself,” said Art Hogan, chief market strategist at Wunderlich Securities.
CNNMoney’s Fear & Greed Index is now flashing “extreme fear,” compared with just run-of-the-mill “fear” a month ago. The wild market moves are also reflected in the VIX volatility index, which spiked 21% on Thursday.
Investors are reacting to this by piling into safe-haven bonds, driving the yield on the 10-year Treasury below 2.3% for the first time in 16 months.
If the Dow ends down by more than 326 points, it would be the index’s worst day of the year, surpassing an early February sell-off.
Both the S&P 500 and Nasdaq were down about 1.8% in midafternoon trading, while the riskier Russell 2000 that includes smaller and mid-sized companies experienced a 2% tumble.
Energy stocks are getting creamed, plunging about 3% as a sector. Stocks like Chesapeake Energy, Anadarko Petroleum and Halliburton suffered even bigger losses.
The group was slammed by sinking crude oil price, which fell as low as $85.60 per barrel — its weakest level since late 2012.
All 10 sectors of the S&P 500 were losing ground on Thursday, although more defensive groups like consumer stapes and utilities felt a bit less pain.
Stocks spiked on Wednesday as the latest Fed meeting minutes suggested slowing global growth and a stronger dollar could prevent the central bank from lifting interest rates. Traders bet that would be good for stocks, which have been boosted by the Fed’s emergency actions.