NEW YORK (AP) -- The stock market is in the midst of its biggest retreat since the financial crisis.
The Dow Jones industrial average plunged as many as 400 points Thursday afternoon. It is now down more than 1,200 points since July 21. The Standard & Poor’s 500 index is down 3 percent, bringing it nearly 11 percent below its recent high of 1,363 reached on April 29. A decline of 10 percent or more is considered to be a market correction.
The Vix, a measure of investor fear, shot up nearly 25 percent. It is up 77 percent for the quarter, which began July 1.
Oil fell 6 percent to $87 a barrel on worries demand will fall because of the slowing economy. Oil had traded over $100 as recently as June 9. The yield on the two-year Treasury note hit a record low as investors sought out relatively stable investments.
Investors are increasingly worried about economic weakness in the U.S. and a debt crisis in Europe.
“We are continuing to be bombarded by worries about the global economy,” said Bill Stone, chief investment strategist at PNC Financial.
The Dow Jones industrial average was down 330 points, or 2.8 percent, to 11,566 in afternoon trading. The S&P 500 lost 39, or 3.1 percent, to 1,221. The Nasdaq composite shed 86, or 2.3 percent, to 2,606. The losses put the Dow on track for its biggest one-day drop since October 2008.
Stock trading has been volatile this week because of concerns that the U.S. economy is weakening. Manufacturing, consumer spending and hiring by private companies are below levels that are consistent with a healthy economy. Those reports have called into question estimates from economists, including Federal Reserve Chairman Ben Bernanke, that the economy will grow more quickly in the second half of the year.
More than 10 stocks fell for every one that rose on the New York Stock Exchange Thursday. Money poured into investments that are seen as relatively safe when markets are turbulent. The yield on the 10-year Treasury note fell to 2.51 percent, its lowest level of the year. The yield on the 2-year Treasury note hit a record low of 0.265 percent. Bond yields fall when demand for them increases.
Large investors have moved so much money into cash accounts at Bank of New York that on Thursday the bank said it would begin charging some clients a 0.13 percent fee to hold their cash.
“In the past month, we have seen a growing level of deposits on our balance sheet from clients seeking a safe-haven in light of the global interest rate and credit environment,” the bank said in a statement to The Associated Press. Bank of New York clients include pension funds and large investment houses.
“Investors are deciding that now is the time to take risk off the table,” said Brian Gendreau, market strategist for Cetera Financial Group. Gendreau said that some investors are now wondering whether stocks will have a prolonged slump similar to the aftermath of the Great Depression.
Technical trading, a term used to signify buying or selling based on the S&P 500’s prior highs and lows, helped push stocks downward. The S&P 500 fell below 1,222, a so-called support level, early in the day. That signified to some traders that the stock market would continue to slide.
“Traders are respecting the technical levels even if they’re not technicians,” said Quincy Krosby, market strategist at Prudential Financial. “Even if you’re what we call a conviction buyer, you have to respect those levels.”
European stocks fell broadly because of concerns that Italy or Spain may need help from the European Union. The benchmark stock indexes in Italy, Germany and England each fell 3 percent.
Companies that outperform when the global economy expands fell the most. Caterpillar Inc. fell nearly 6 percent, and Chevron Corp. fell 5 percent.
Some traders are selling ahead of Friday’s employment report, which is expected to show that unemployment remained at 9.2 percent last month. A rise in the unemployment number would likely push stocks lower again.
The U.S. government said before the market opened that the number of people who applied for unemployment benefits for the first time was only slightly lower last week to 400,000. That’s still above the 375,000 level that economist say indicates a healthy job market. It was the latest indication of weakness in the U.S. economy.
All 10 industry groups in the S&P index fell. Energy, materials and industrial companies each lost 4 percent or more.
The sell-off comes at a time when corporate profits are growing. The forward price to earnings ratio of the S&P 500 has fallen to about 12, well below its long-term average of 16. That means that investors who buy now are paying less for each dollar in profits.
General Motors Co. fell 4 percent despite beating analyst estimates. CVS Caremark fell nearly 4 percent after its revenue slipped last quarter.
Several national retailers are announcing July sales results throughout the day. Target, Gap Inc. and Macy’s each fell by more than 1 percent, in part because of concerns that consumers would spend less if the economy continues to slow down.
The Dow rose 30 points Wednesday - after being down 166 - to break an eight-day losing streak. Nine days would have been the longest since February 1978. The S&P 500 index rose 6 points and broke a seven-day streak.
AP business writers Dave Carpenter, Francesca Levy and Pallavi Gogoi contributed to this story.