The Toronto Stock Exchange had its biggest one-day decline ever on Thursday as the fear that has gripped stock markets in recent weeks showed no signs of abating.

The S&P/TSX Composite Index fell by 1761 points to 12,508. That's a decline of almost 12 per cent, the biggest in the index's history, eclipsing the previous record that was set on Black Monday in October 1987.

Every sector was lower, from energy and financials to utilities and retailers. Only one company on the index, auto parts maker Linamar, saw its shares eke out a small gain as the company posted earnings on Wednesday that showed higher profits and cash flow. But every single one of the other 229 companies on Canada's benchmark stock index fell.

The selling was so frantic that rules known as "circuit breakers" were automatically implemented, halting trading for 15 minutes to try to give the stock market a breather after it ran out to a seven per cent loss within minutes of opening.

LEVEL 1 MARKET-WIDE CIRCUIT BREAKERS TRIGGERED: At the instruction of IIROC, TSX, TSXV and TSX Alpha have been halted due to the triggering of a level 1 market-wide circuit breaker. Markets are now in Pre-Open state and are set to resume trading at 09:51:00. —@TMXGroup

The pause wasn't enough for cooler heads to prevail, as the sell-off intensified through the day.

U.S stocks fared no better, with the Dow Jones Industrial Average shedding 2,352 points to 21,200. That's a 10 per cent decline and the worst one-day points loss in the Dow's 125-year history.

The U.S. Federal Reserve tried to staunch the bleeding in the afternoon by pledging to purchase $1.5 trillion US worth of assets in what's known as the "repo market" but it was quickly ignored as investors focused on the situation with the coronavirus, which is having dire economic repercussions around the world.

The spectre of worries over access to cash is "is slightly reminiscent of 2008, though nowhere near as close," said Frances Donald, global chief economist at Manulife. "This market [is] grappling with whether we improve from this point forward or things worsen."

Liz Ann Sonders, chief investment strategist at Charles Schwab, said the market is finally waking up to the impact widespread quarantines and trade flows grinding to a halt will have on the world's economy.

"We're starting to get a sense of how dire the impact on the economy is going to be," she said. "Each day the news doesn't get better, it gets worse. It now has hit Main Street to a more significant degree."

The VIX index — which is known as Wall Street's "fear index" because it tracks volatility — rose 19 points to 73.07, its highest level since the financial crisis of 2008 and 2009.

The sell-off comes on the heels of the two stock groupings officially plunging into bear market territory on Wednesday, which is defined as a loss of more than 20 per cent since their peak. The TSX is now down by more than 30 per cent from the all-time high of almost 18,000 points that it set less than a month ago.

This shows the lengths and depths of the last five bear markets on the S&P 500 that we've seen, prior to this one. (Scott Galley/CBC)

Anything related to airlines was especially hard hit, as travel around the world dries up. In a Wednesday evening address, U.S. President Donald Trump announced that travel between more than two dozen European countries and the U.S. would be restricted for a month, starting tomorrow.

"If President Trump's speech from the Oval Office last night was intended to reassure markets that the U.S. administration was on the ball when it comes to dealing with COVID-19 in the U.S., it missed the mark by a mile," said Michael Hewson, chief market analyst at CMC Markets.

Air Canada shares closed down 14 per cent, to just under $24 a share. Shares in the airline have lost more than half of their value in barely a month.

Shares in U.S. plane maker Boeing also plummeted, down another 18 per cent to just over $154 US a share. Less than a month ago, those same shares were worth almost $350.

But just about every sector was swept up in the selling. Shares in RBC, Canada's most valuable company, lost more than 10 per cent of their value. Shares in Suncor, Canada's most valuable oil company, lost another 20 per cent and are now worth less than half what they were barely a month ago.

"It's not just the fear of the economy going weak, but basically being on the brink of shutting down," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.

"It's mass selling across the board [and] we are pricing in a potential to go into another financial crisis."

Chris Rupkey, chief financial economist at MUFG Union, said the sell-off is now the steepest and fastest market correction he has ever seen.

"The economy is doomed to recession if the country stops working and takes the next 30 days off," he said. "The stock market knows it."

The sell-off on the TSX has wiped out several years' worth of gains from a multi-year bull run, as it pushed Canada's benchmark stock index back to where it was at the start of 2016.

"The slide has erased all the gains in the past year," BMO economist Sal Guatieri said. "There have been several other periods of [annual] declines in stock values in the past decade, all of which proved temporary.

"Let's hope the current slump follows that pattern," he said.

Canada remains in strong position: Morneau

Finance Minister Bill Morneau offered reassurance to Canadians at the end of a day that saw record declines.

"We expect a level of volatility in the stock market right now. We know that, with the coronavirus, that there's a high level of uncertainty and that's reflected in markets," he said.

Finance Minister Bill Morneau offered reassurance to Canadians at the end of a day that saw record declines in the stock market. 1:24

Morneau said he wanted to reassure people that the federal government is doing everything it can to both protect the health of Canadians and ensure the "long-term" viability of the economy.

He referenced the $1 billion announced Wednesday to boost the health-care system's response to the virus. He also reminded Canadians that steps have been taken to ensure people can stay home from work and that, despite running federal deficits, Canada remains in a strong position to act if necessary.

Morneau also said he would be speaking with the U.S. Treasury Secretary Steven Mnuchin and some Canadian banking leaders to make sure the government retains the capacity to respond as necessary.