Posted: 9:55 am EDT August 4, 2011Updated: 12:25 pm EDT August 4, 2011
NEW YORK (CNNMoney) -- U.S. stocks plunged, with the Dow losing more than 350 points Thursday, as investors remain on edge about the global economy.There's "total fear" in the market right now, said Bob Doll, chief equity strategist at BlackRock.The Dow Jones industrial average dropped 350 points, or 2.5%, with Alcoa, Caterpillar and Bank of America among the biggest drags on the blue chip index. The only gainer was Kraft, following news that the company plans to split itself in two.The S&P 500 was down a staggering 41 points, or 3.2%, with only nine of the index's components showing modest gains.The Nasdaq lost 91 points, or 3.4%. Some of the better performing tech stocks, Apple, Google and Netflix were all down between 2% and 3%.All three indexes have now erased their gains for the year and are in 'correction' territory - defined as a 10% from their cyclical highs. Over the past 10 days alone, the indexes have dropped more than 8%.The market's fear gauge -- the VIX -- surged 16% to a reading of 27. That's still just shy of 30 -- the level that signals a high degree of fear. With the VIX up 53% from the start of the year, it's clear that fear has been on the rise.It should come as no surprise that investors flocked to assets perceived as low-risk, including U.S. bonds and gold.Treasury prices rose, pushing the yield on the 10-year note down to 2.48% from 2.6% late Wednesday, and gold futures for December delivery rose $2.40 to $1,668.70 an ounce. Earlier in the session, gold hit a record high of $1,684.70 an ounce.Thursday's losses came as European stocks also plunged. Britain's FTSE 100 tumbled 3.4%, Germany's DAX lost 3.9% and France's CAC 40 fell about 3.4%.Economy: Fears about a global economic slowdown are at the forefront of investors minds amid recent weak economic data.Early Thursday, the latest reading on jobless claims showed a large number of Americans remain unemployed. But economic woes weren't contained just to the United States.Taking dramatic steps to shore up their financial markets, Japan's government stepped in to weaken the yen, and the European Central Bank decided to re-enter the European bond market."It's true that we are in a period of a high level of uncertainty, not only in euro area but at the global level," ECB President Jean-Claude Trichet said in a press conference Thursday.Thursday morning, the Labor Department's weekly initial jobless claims report showed that first-time unemployment claims totaled 400,000 last week. Economists had expected weekly unemployment claims to rise to 405,000 from last week's revised 398,000 claims.While the number was mildly better than expected, it still indicated weakness in the labor market.Investors are on edge ahead of Friday's closely watched monthly jobs report, which is expected to show that the U.S. economy created 75,000 jobs in July, according to a consensus of 19 economists surveyed by CNNMoney.In June, the economy added a paltry 18,000 jobs. The unemployment rate is expected to hold steady at 9.2%.Companies: Auto giant General Motors' second-quarter earnings nearly doubled to $2.5 billion, as revenue rose 19% and topped expectations. Shares of GM slid 2.6%.Insurance company AIG and newly public LinkedIn are scheduled to report financial results after the closing bell Thursday.In addition to quarterly financial reports, retailers were also announcing July sales results.Costco Wholesale Corp. said its same-store sales climbed 10% last month, while Limited said sales rose 6%.World markets: The European Central Bank met to discuss the region's monetary policy, and the debt problems facing Italy and Spain. The ECB left interest rates unchanged at 1.5% and initiated a 6-month refinancing operation to add liquidity to European markets.Meanwhile, European Commission president Jose Manuel Barroso urged European Union officials to reassess the recent bailout funds, as "markets remain to be convinced that we are taking the appropriate steps to resolve the crisis."Asian markets ended the session mixed. The Shanghai Composite and Japan's Nikkei edged up 0.2%, while the Hang Seng in Hong Kong fell 0.5%.The Bank of Japan took steps to stem the yen's rise, by easing its monetary policy and selling a trillion yen or $12.6 billion. Japan's move came a day after Switzerland intervened to curb the Swiss franc's rise.Currencies and commodities: Following Japan's pledge to lower the value of the yen, the dollar surged almost 2.6% against the Japanese currency.The dollar also rose versus the euro and British pound..