Wall Street’s bell closed on the worst day U.S. stock markets have seen since the 2008 financial crisis, with the Dow plunging 512 points on Thursday.
Asian stock markets appear to have followed suit, recording sharp declines, on Friday – extending a global equity sell off after Wall Street plummeted.
Other countries are also feeling the backlash: Australia’s All Ordinaries fell 4.3%, Japan’s Nikkei dropped 3.5%, and South Korea’s Kosp dipped 3.6%.
The U.S. stock market was on a continuous downward spiral and finally hit bottom today, as investors cracked under the pressure of a worldwide economic decrease and lack of stable financial markets.
"It was an absolute bloodbath," said John Richards, head of strategy at RBS Global Banking & Markets.
Traders say there is no “one” reason for such a devastating hit, but rather the build-up has been growing over the past month. Turmoil over the country’s debt ceiling and worries about a U.S. default have heightened fears about the failing condition of the American economy, despite a last-minute resolution to raise U.S debt ceiling reached on Tuesday.
"The conventional wisdom on Wall Street was that the economy was growing -- that the worst was behind us," said Peter Schiff, president of Euro Pacific Capital. "Now what people are realizing is the stimulus didn't work, and we may be headed back to recession."
Shareholders are asking the question, “How much longer the recent run of strong corporate earnings can continue?”
Corporate profits have been a beacon in the fog of economical unrest, with companies like Kraft Foods posting a net revenue of $13.9 billion in the second quarter, up 13.3 percent from last year.
Extensive worries and a weak job market have caused a prominent decline in the Dow.
There is a feeling of "total fear" in the market, said Bob Doll, chief equity strategist at the world's largest money manager, BlackRock.
The rally in U.S. treasury bonds is a reflection of the anxiety among investors. The bonds are held as a security for investors in times of trouble. The yield on the 10-year Treasury note falls as prices rise. On Thursday, the prices plummeted to 2.46% at 3 p.m. – the lowest it has been since October 2010.
"In the last two weeks, we've been through the ringer," said Rich Ilczyszyn, market strategist with futures broker Lind-Waldock. "When we start looking at the recovery, there's nothing to hang our hats on anymore."
The VIX, the market’s fear gauge, rocketed up 35.8% to a reading of 31.8 – levels above 30 signals a high degree of fear.