Wall Street dips more than 300 points- Worst day of the year

NEW YORK -- The stock market had its worst day of the year Thursday, just 24 hours after recording its best.

The Dow Jones industrial average plunged 334 points as falling energy stocks and worries about the global economy sent investors fleeing out of the market. The blue-chip index rose 275 points the day before.

For three years, U.S. investors have enjoyed a stock market that has, for the most part, quietly and steadily moved higher. The pleasure cruise appears to be over.

Market volatility is back and in a big way, market observers say. The stock market hasn't seen day-to-day movements like this since August 2011, when Standard & Poor's downgraded the United States' credit rating. The S&P downgrade subsequently pushed the U.S. stock market into its last "correction," a technical term for when stocks fall 10 percent or more from a recent peak.

"Investors are not conditioned for this type of market after three good years," said Dean Junkans, chief investment officer for Wells Fargo Private Bank. "We've been long overdue for a correction."

Words like "correction," ''fear" and "volatility" might scare the average investor just trying to save for retirement. But investors who might be worried should remain calm, said Jurrien Timmer, director of global macro at Fidelity Investments. The S&P 500 index is still up 4.3 percent this year. And that follows the market's 30 percent surge last year.

"Just stick to your long-term (retirement) plan," Timmer said.

Thursday's drop was the third straight day investors have been taken on a wild roller coaster ride. On Tuesday the Dow fell 272 points, only to jump by nearly the same amount Wednesday. While 100-plus moves in the Dow have become more common as stocks have risen to record highs, 200-plus point moves had been rare until this week. More than half of this year's 200-point moves have happened in the last two weeks.

The VIX, a measure of volatility that is sometimes called Wall Street's "fear index," jumped 26 percent to its highest level since February. Investors moved into gold, a refuge in times of uncertainty.

"The violent gyrations are causing havoc for fund managers and active investors (who were) hoping for a smooth fourth quarter," said Todd Schoenberger of J. Streicher Asset Management.

Stocks fell at the opening of trading Thursday, and the selling accelerated once European markets closed at midday Eastern time.

By the end of the day, the Dow had lost 334.97 points, or 2 percent, to 16,659.25. The Standard & Poor's 500 index lost 40.68 points, or 2.1 percent, to 1,928.21 and the Nasdaq composite fell 90.26 points, or 2 percent, to 4,378.34.

Few companies were spared from the selling Thursday. All 30 members of the blue chip Dow index fell and 482 of the 500 companies in the S&P 500 index ended the day lower.

A large part of Thursday's selling happened in energy stocks, particularly oil and coal companies. The price of oil fell sharply again Thursday, continuing its multi-week decline. Investors are concerned that global oil production remains high despite signs that global demand is slowing.

Worries about the global economy, particularly in Europe and Asia, fueled the fears of a slowdown were once again center stage.

A report showed Germany exports sank 5.8 percent in August; the biggest monthly drop in five years. The figure raises concerns that Europe's largest economy may fall into recession. Earlier in the week, the IMF cut its outlook for this year and next for the global economy, citing weakness in Japan, Latin America and particularly Europe.

"Europe is struggling. Asia is struggling. Japan is struggling. The United States is the best house on the block at the moment," Fidelity's Timmer said.

Traders say the market's volatility may ease once corporate earnings season gets fully underway. Aluminum company Alcoa reported its results Wednesday, which beat analysts' expectations, but the bulk of S&P 500 companies will not report for another week or so.