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.
"Everyone seems to be waiting for earnings season at this point," said Neil Massa, senior equity trader at John Hancock Asset Management.
In company news, Gap dropped $5.23, or 13 percent, to $36.67. The clothing chain's CEO Glenn Murphy announced he would step down in February. The news came as a surprise to investors, since Murphy is only 52 and was expected to continue in his role for several more years. Murphy was credited for helping Gap navigate through the Great Recession and restoring the company's appeal to younger customers.
Advanced Micro Devices, better known as AMD, fell 33 cents, or 10 percent, to $2.95. The chipmaker also announced a change in leadership, saying CEO and president Rory Read was stepping down. AMD has long struggled to keep its market share of the PC chip market against its main competitor Intel.
Coal stocks also took a beating after Morgan Stanley analysts downgraded the entire industry. Walter Energy slumped 11 percent and Peabody Energy fell 9 percent.
Benchmark U.S. crude fell $1.54 to $85.77 a barrel on the New York Mercantile Exchange, a third straight decline of more than 1.5 percent. Oil is now 20 percent below its 2014 peak of $107.26 a barrel, reached in late June, technically pushing oil into a bear market.
Brent crude, an international benchmark used to price oil used by many U.S. refineries, fell $1.33 to $90.05 a barrel in London, at one point slipping below $90 for the first time since June 2012.
Sinking crude price mean lower future profits for oil and gas companies, and investors responded accordingly. The energy sector of the S&P 500 fell nearly 4 percent, far more than the rest of the market. Exxon Mobil and Chevron, the nation's two largest oil and gas companies, each fell roughly 3 percent.
The dollar fell to 107.92 yen and the euro fell to $1.2687. U.S. government bond prices were little changed. The yield on the 10-year Treasury note held at 2.33 percent.
Wholesale gasoline futures fell 4.35 cents to $2.275 a gallon. The average price at the pump across the U.S. is $3.25, down 18 cents from a month ago. In other trading of energy futures on the New York Mercantile Exchange, heating oil fell 3.9 cents to $2.537 a gallon and natural gas slipped 1 cent to $3.845 per 1,000 cubic feet.
With this week's volatility, investors moved into gold. The price of gold rose $19.30 to $1,225.30 an ounce. Silver rose 35 cents to $17.42 an ounce and copper rose three cents to $3.03 a pound.