The Dow Jones Industrial Average slumped, led by BofA [BAC 8.1475 -0.6825 (-7.73%) ] and Caterpillar [CAT 87.4664 -2.0836 (-2.33%) ], after nose-diving more than 500 points—its worst one-day fall since Dec. 2008. The blue-chip index was up 171 points at its session high this morning.
In the previous session, all three major averages tumbled into negative territory for the year. In addition, all three indexes fell into "correction territory," defined by a drop of 10 percent from its peak from its intraday high in Apr. 29.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, surged almost 10 percent to trade above 34.
All key S&P sectors slid, led by techs and banks.
Stocks were also pressured amid market rumor that S&P is planning on downgrading the U.S.’s credit rating after the markets close Friday.
“[The rumor] had an impact on the market rolling over somewhat, but I don’t think they were rampant on Wall Street,” Art Cashin, director of floor operations at UBS Financial Services told CNBC.
“The key remains Europe and Italy,” explained Cashin. “This weekend could be critical and I think it will be interesting to see how the U.S. traders will play the final hour…there’s no reason to be aggressively long [ahead of the weekend]”Read More: World Economy Rolling Toward 'Total Collapse'—Faber