The Dow Jones Industrial Average plunged sharply, led by Caterpillar [CAT 92.82 
-3.46 (-3.59%) 
] and Alcoa [AA 13.72 -0.54 (-3.79%) ], after rebounding from a deep selloff in the previous session to snap an eight-day losing streak. The blue-chip index is down for the 9th day in 10.
-3.46 (-3.59%) ] and Alcoa [AA 13.72 -0.54 (-3.79%) ], after rebounding from a deep selloff in the previous session to snap an eight-day losing streak. The blue-chip index is down for the 9th day in 10. The S&P 500 and the tech-heavy Nasdaq also tumbled. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 24.
All 10 S&P sectors were trading lower, led by energy and materials.
“The market has become so emotional that it’s not good for the confidence factor,” said Doreen Mogavero, president and CEO of Mogavero Lee & Company. “Traders are watching a combination of everything.”
Weekly jobless claims were little changed last week, edging down 1,000 to a seasonally adjusted 400,000, according to the Labor Department. Economists had forecast claims rising to 405,000, according to a Reuters poll.
“The jobless claims number was not encouraging … we need to see more of a significant improvement than the data just squeaking by,” said Mogavero.
The claims news comes ahead of Friday's government non-farm payroll data, which likely increased 85,000 last month, according to a Reuters survey, after rising only 18,000 in June. The unemployment rate is expected to hold steady at 9.2 percent.
“We’ve reduced our equity exposure by half at the end of the second quarter,” said Rob Stein, portfolio manager and senior economist of Astor Asset Management. “We’ll need to see the economic data stabilize.”
European shares turned lower to hit an 11-month low. The Bank of England and European Central Bank both left rates unchanged, although investors were watching for any indication from the ECB that it will be willing to buy Spanish and Italian debt after the rise in Italian and Spanish bond yields in recent days.
Meanwhile, The ECB signaled it was buying government bonds in response to a deepening European debt crisis.
"It is true that we are experiencing a high level of uncertainty, not just in the euro zone," said ECB President Jean-Claude Trichet, adding that "downside risks may have intensified."
Gold prices soared again, surging above $1,680 an ounce amid the ongoing uncertainty.
Adding to woes, JPMorgan [JPM 38.72 -1.18 (-2.96%) ] cut its third-quarter U.S. economic growth forecast by 1 percent, pointing to recent developments in the U.S. economy. The firm added that it doesn't expect the Fed to raise interest rates until at least 2013.
-1.18 (-2.96%) ] cut its third-quarter U.S. economic growth forecast by 1 percent, pointing to recent developments in the U.S. economy. The firm added that it doesn't expect the Fed to raise interest rates until at least 2013. The dollar soared against a basket of currencies. The greenback's surge came amid a weakening economic outlook and moves by Japan to intervene in the forex market to bolster the yen.
Meanwhile, the Bank of Japan sold 1 trillion yen ($12.6 billion) and eased monetary policy, joining Switzerland in efforts to tame currencies buoyed by safe-haven demand from investors fretting about the health of the global economy.
GM [GM 26.5165 -0.6535 (-2.41%) ] gained after the automaker posted earnings that nearly doubled, as the firm a larger share of sales globally and raised prices on its vehicles.
-0.6535 (-2.41%) ] gained after the automaker posted earnings that nearly doubled, as the firm a larger share of sales globally and raised prices on its vehicles.Kraft Foods [KFT 35.41 
1.11 (+3.24%) ] also rose after the Dow component earnings beat estimates, raised its guidance and announced it will split in two.
1.11 (+3.24%) ] also rose after the Dow component earnings beat estimates, raised its guidance and announced it will split in two. AIG [AIG 27.68 -0.51 (-1.81%) ] and Sunoco [SUN 37.35 -1.56 (-4.01%) ] are expected to post earnings after-the-bell tonight.
-0.51 (-1.81%) ] and Sunoco [SUN 37.35 -1.56 (-4.01%) ] are expected to post earnings after-the-bell tonight. U.S. warehouse club operator Costco [COST 77.71 0.63 (+0.82%) ] posted a higher-than-expected 10 percent rise in July sales at stores open at least a year, helped by higher gas prices and strengthening foreign currencies. Other major U.S. retailers will be releasing July sales numbers throughout the morning.
0.63 (+0.82%) ] posted a higher-than-expected 10 percent rise in July sales at stores open at least a year, helped by higher gas prices and strengthening foreign currencies. Other major U.S. retailers will be releasing July sales numbers throughout the morning. By: JeeYeon Park taken from http://www.cnbc.com/id/44017828
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