Dire day of selling sinks US equities

US stocks plunged yesterday, extending a selloff to four days, as policymakers’ failure to arrest global economic stagnation sent markets spiraling downward.

The heavy volume of last night’s plunge signaled investors are selling in anticipation of more losses. Wall Street’s “fear gauge”, the CBOE Volatility Index, jumped 12 per cent, giving the index its biggest two-day percentage spike in a month as investors protected against more losses to come.

Energy and materials shares were among the hardest hit areas on worries of slowing worldwide demand. Signs of a slowdown in China fed those fears.

The Dow Jones industrial average dropped 391.01 points, or 3.51 per cent, to 10,733.83. The Standard & Poor’s 500 Index lost 37.20 points, or 3.19 per cent, to 1,129.56. The Nasdaq Composite Index slid 82.52 points, or 3.25 per cent, to 2,455.67.

Volume of about 13.24bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq was well above the daily average of 7.8bn and the highest since 10 August.

US crude oil futures tumbled more than six per cent, the biggest one-day percentage drop in six weeks.

The S&P materials index fell 5.5 per cent.