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Traders fled equities in search of safer havens like Treasury bonds, igniting a chain of selling that sent the major market averages plunging as much as 3%.
Today's Markets
As of 12:30 p.m. ET, the Dow Jones Industrial Average fell 300 points, or 2.5%, to 11,596, the S&P 500 slipped 34.7 points, or 2.8%, to 1,225 and the NASDAQ Composite slid 79.1 points, or 2.9%, to 2,613. The FOX 50 tumbled 20.1 points, or 2.3%, to 881.
Uneasiness on Wall Street was high on Thursday. Traders piled up into Treasury bonds, seen as safe-haven during tumultuous time. Indeed, Treasury yields on 10-year Treasury securities dipped below 2.5% -- the lowest since November.
The VIX, sometimes referred to as a gauge of fear, surged 12%. The broad S&P 500 dived into the range of a correction in intra-day trade, which is defined as a 10% move from a recent high. Both the NASDAQ & Dow are close to hitting a point of correction as well.
Gold, which as seen considerable buying amid the volatility in the equity markets, actually pared gains and dipped $13.10, or 0.78%, to $1,654 a troy ounce.
While the selling has been veracious on the day, some market participants have seen the drastic selling as excessive.
"The speed at which people are marking assets down doesn't match the speed at which the economy has deteriorated," said Daniel Greenhaus, chief global strategist at BTIG.
With the debt ceiling raised, focus on Wall Street has shifted to the beleaguered labor market.
The number of individuals applying for first-time unemployment benefits fell to 400,000 from a revised 401,000 in the prior week, slightly better than the 405,000 economists were expecting. However, claims have remained right around the 400,000-level for weeks, leading economists to question the robustness of the recovery in the labor markets.
"The pace of firings are moderating but are still too elevated at this point of the economic cycle," wrote Peter Boockvar, managing director at Miller Tabak + Co., in a research note.
Other analysts see more improvement in the labor market: "This report and recent trends in claims data suggest that the softness in the labor market may be beginning to subside," analysts at Barclays Capital noted.
Energy markets were in free fall amid concerns that demand for energy may wane, coupled with strength in the greenback.
Light, sweet crude plunged $4.29, or 4.8%, to $87.40 a barrel. Wholesale RBOB gasoline slumped 14 cents, or 4.7%, to $2.80 a gallon.
Energy and materials stocks, like Chevron (CVX: 98.60, -4.16, -4.05%) and Alcoa (AA: 13.61, -0.65, -4.56%), were the biggest drag on the Dow. While every major sector was down, a strong performance by Kraft Foods (KFT: 35.12, +0.82, +2.39%) helped buoy the non-discretionary consumer sector.
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