U.S. stocks sold off and closed near session lows on Thursday as persistent worries about the health of the Chinese economy and a continued slide in commodity prices sent investors for cover.

Global markets have been taking their cues from China all week and a halt in the China stock market, following a 7% fall in the Shanghai Composite Index and reports of the possibility of further devaluation of the yuan Thursday have frightened investors, with global equity markets plunging to multi-month lows.

This is the second time this week that China’s newly implemented circuit breakers have crossed over and infected the broader U.S. market. The China Securities Regulator on Thursday said it would suspend its four-day-old circuit-breaker system, saying the mechanism didn’t work out “as expected.”

Volatile crude-oil prices also helped fuel heavy selling, hitting large energy producers and drillers.

On Thursday, the S&P 500 index SPX, -0.84% fell 47.17 points, or 2.3%, to 1,943.09, with all 10 main sectors finishing with losses. Technology and financials led the losses, falling 3.1% and 2.8% respectively.

See also:These 15 S&P components have already lost at least 10% this year

The Dow Jones Industrial Average DJIA, -0.46% dropped 392.41 points, or 2.3%, to 16,514.10, with 29 of its 30 members in negative territory. Since the start of the year, the blue-chip index has lost more than 900 points, its worst start to the year ever, according to FactSet.

Meanwhile, the Nasdaq Composite COMP, -1.26% had the steepest declines, down 146.34 points, or 3%, at 4,689.43.

All three benchmarks are down nearly 10% from their peak levels in May.

“There is no panic-selling in the market today, but definitely some concerns surrounding China’s market,” said Mark Kepner, managing director of international sales and trading at Themis Trading.

“Stock indexes broke through important support levels and the trend has been down. How markets react to the jobs report tomorrow will depend on what happens overnight in China,” Kepner said.

Meanwhile, the CBOE volatility index, also known as Wall Street’s Fear Gauge, jumped 20% to 24.90, above the historical average of 20. The Vix index gained nearly 37% so far this week.

Some analysts suggested that relatively high valuations made markets prone to wild swings whenever bad news hits airwaves.

“The stock market is still expensive and vulnerable to outside shocks. We are in the middle of a correction, but it is not the end of the world,” said Jack Ablin, chief investment officer at BMO Private Bank.

“Friday’s jobs report will remind a lot of bears out there that the domestic economy is still OK,” Ablin said.

A report on weekly jobless claims showed that in 2015 the number of Americans who applied for new unemployment benefits fell to the lowest level in 42 years. Friday brings the closely watched nonfarm-payrolls report, with analysts polled by MarketWatch expecting 215,000 new jobs created last month.

“ ‘We are in the middle of a correction, but it is not the end of the world.’ ” — Jack Ablin, chief investment officer at BMO Private Bank

The fresh turbulence in Chinese financial markets came after the People’s Bank of China allowed the yuan USDCNY, -0.10% to fall further against the dollar. Chinese stock markets stopped trading after about 30 minutes, making it the shortest trading day ever for Chinese equities.

Read more: China blames speculators for weakened yuan

Oil blues: A continued rout in oil prices also depressed the investing mood on Thursday. Crude oil CLG26, fell 2.1% to settle at $33.27 a barrel, its lowest level in more than 11 years.

The slump hit energy stocks with 33 of the 40 shares on the S&P 500 energy sector closing lower. Williams Companies, Inc. WMB, -0.51% and Anadarko Petroleum Corp. led the losses, down 10% and 8.3% respectively.

Movers: Apple Inc. AAPL, -1.59% shares tumbled 4.2, dropping below $100 after a Wall Street Journal report said the company has scaled back iPhone production.

Read also:Is Apple a value stock or a value trap?

Yahoo Inc. US:YHOO slumped 6.2% after reports the Internet giant is set to cut at least 10% of its workforce.

KB Home KBH, -0.87% reported earnings that fell short of the FactSet consensus estimates, sending shares plunging 15%.

Shares of Macy’s Inc. M, -1.71% rose 2% after the retailer outlined plans to cut jobs and spending late Wednesday.

Finish Line Inc. US:FINL shares slumped 10% after the athletic-wear retailer posted a loss for the third quarter.

Constellation Brands Inc. STZ, -0.51% gained 4.5% after the wine and spirits company reported earnings ahead of expectations.

J.C. Penney Co. Inc. US:JCP shares rallied 3.7% after the retailer reported same-store sales rose 3.9% in the holiday period. Signet Jewelers Ltd. SIG, +2.67% also reported a gain in sales for the season, up 4.9%.

Other markets: European stocks were hit hard by the Chinese jitters, with the Stoxx Europe 600 index SXXP, -0.11% closing down 2.2%, its lowest level in three month.

Gold US:GCG6, on the other hand, benefited from safe-haven flows, rising for the fifth straight session. The yellow metal rose or 1.5%, to settle at $1,107.80 an ounce.