Wall Street’s worst day of the year; more volatility ahead

A display board on the floor of the New York Stock Exchange tracks the market’s plunge. A display board on the floor of the New York Stock Exchange tracks the market’s plunge. Photo: Andrew Burton / Getty Images Photo: Andrew Burton / Getty Images Image 1 of / 3 Caption Close Wall Street’s worst day of the year; more volatility ahead 1 / 3 Back to Gallery

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, 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.”

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Words like “correction,” “fear” and “volatility” might scare the average investor just trying to save for retirement. But those who might be worried should remain calm, said Jurrien Timmer, a director in Fidelity Investments global asset allocation division. The S&P 500 index is still up 4.3 percent this year. And that follows the market’s 30 percent rise 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 ride. On Tuesday the Dow fell 272 points, only to jump by nearly the same amount Wednesday.

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.

A large part of Thursday’s selling happened in energy stocks, particularly oil and coal companies. The price of oil fell sharply again Thursday. 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, fueling the fears of a slowdown were once again center stage.

“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.

Gap dropped $5.23, or 13 percent, to $36.67 on the news that the San Francisco clothing chain’s CEO Glenn Murphy will step down in February. The news came as a surprise to investors, because Murphy was expected to continue in his role for several years. He was credited for helping Gap navigate through the recession and restoring the company’s appeal to younger customers.

Advanced Micro Devices, fell 33 cents, or 10 percent, to $2.95 after the chipmaker said CEO and president Rory Read was stepping down.

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.

Sinking crude price mean lower future profits for oil and gas companies. 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.