NEW YORK (Reuters) - Wall Street stock indexes tumbled on Wednesday as spooked investors ran for safety on global economic and political worries while U.S. Treasuries prices climbed and the U.S. dollar surged.

FILE PHOTO - A trader works on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 23, 2018. REUTERS/Brendan McDermid

The S&P 500 and the Dow Jones Industrial Average erased their gains for the year while Nasdaq confirmed a correction and the CBOE volatility index registered its highest close since February. [.N]

Investors have been unnerved by a myriad of issues including some disappointing earnings reports, uncertainty over Brexit, Italy’s budget spat with the European Commission, upcoming U.S. midterm congressional elections and pressure on Saudi Arabia over the killing of a prominent journalist.

“It looks like more panic and fear as the selling has continued to roll,” said Chris Zaccarelli, Chief Investment Officer at Independent Advisor Alliance in Charlotte, North Carolina.

The U.S. dollar rose sharply against the euro to its strongest since August after PMI data showed business growth in the euro zone decelerated faster than expected due to waning orders.

U.S. Treasury debt prices rose as investors were wary of volatile equities, and benchmark 10-year Treasury note yields fell to three-week lows.

“It’s a big, global risk-off trade,” said Paul Zemsky, chief investment officer at Voya Investment Management in New York. “We’ve had some headwinds - higher interest rates affecting housing, tariffs causing input costs to manufacturers to go up, which makes earnings look not as stellar ... but that doesn’t mean the whole economy is rolling over.”

The Dow Jones Industrial Average fell 608.01 points, or 2.41 percent, to 24,583.42, the S&P 500 lost 84.59 points, or 3.09 percent, to 2,656.1 and the Nasdaq Composite dropped 329.14 points, or 4.43 percent, to 7,108.40.

U.S. data showed a decline in sales of new single-family homes to a near two-year low in September and numbers for the prior three months were revised lower.

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Also straining investor sentiment was the Federal Reserve’s Beige Book report on economic conditions which pointed to U.S. factories raising prices because of tariffs while inflation appeared modest or moderate in most parts of the country.

MSCI’s gauge of stock markets across the globe shed 2.07 percent. On Tuesday, the index had closed more than 11 percent below its January record close.

Benchmark 10-year U.S. Treasury notes were last up 15/32 in price to yield 3.111 percent, from 3.166 percent late on Tuesday.

(Graphic: World stocks slump in 2018 - tmsnrt.rs/2NWADMB)

Oil prices fell in late trade after settling higher on a much bigger-than-expected drawdown in U.S. gasoline and diesel inventories which augured a seasonal increase in refining demand. However, traders were concerned about worldwide demand. [O/R]

U.S. crude fell 0.29 percent to $66.24 per barrel and Brent was last at $75.45, down 1.3 percent. [O/R]

Saudi Arabia, a major oil producer, is in the midst of a diplomatic storm over the death of dissident journalist Jamal Khashoggi during a visit to the Saudi consulate in Istanbul.

In currencies, the dollar index rose 0.44 percent, with the euro down 0.65 percent to $1.1395.

The Japanese yen strengthened 0.24 percent versus the greenback at 112.18 per dollar, while sterling was last trading at $1.2885, down 0.75 percent.

British Prime Minister Theresa May received a show of support from her Conservative Party on Wednesday at a meeting in parliament, shifting focus away from talk of an imminent leadership challenge over her Brexit strategy..

U.S. gold futures fell 0.14 percent to $1,235.10 an ounce as the dollar firmed and speculators locked in profit from a more than three-month peak hit the previous session.

The pan-European STOXX 600 index fell 0.21 percent, failing to maintain gains from earlier in the session.