Mounting evidence that the world economy is slowing down sharply sent global stock markets spiraling down Thursday as investors brushed off the Federal Reserve's efforts to spur growth.
Investors focused on the central bank's gloomy outlook. The fears sent Wall Street almost to its worst close of the year.
The Dow fell 391.01 points, or 3.5 percent, and closed at 10,733.83. The selling was not just steep but broad: Nineteen stocks on the New York Stock Exchange fell for every one that rose.
Oil dropped more than $5 a barrel to $80.51, its lowest settling price since Aug. 9. The selling reflected concerns that world demand for oil will fall.
Not even China was spared from bad news: A Chinese manufacturing survey suggested a sharp slowdown.
FedEx, a company that ships so many goods it is considered a barometer of the U.S. economy, had to lower its earnings forecast for the year because customers are putting off purchases of electronics and gadgets from China.
"Markets rely on confidence and certainty. Right now there is neither," said John Canally, an economic strategist at LPL Financial, a Boston investment firm.
It was the second consecutive rout in the stock market since Wednesday afternoon, when the Federal Reserve announced a change in strategy for fighting the economic slowdown — a bid to lower long-term interest rates and get people and companies to spend more money.
A closely watched survey in Europe indicated a recession could be on the way there.
"The probability of going back into recession is higher now than at any point in the recovery," said Tim Quinlan, an economist at Wells Fargo. He put his odds of a recession at 35 percent.
Christine Lagarde, the head of the International Monetary Fund, said the world economy was "entering a dangerous phase." She told an annual meeting of the IMF and World Bank that nations need credible plans to get their debt under control.
In a sign of what a rocky year it has been for the stock market, Thursday's decline isn't even close to the biggest in 2011. The Dow fell 634 points on Aug. 8, 519 points on Aug. 10 and 512 points on Aug. 4.
The government reported Thursday that fewer Americans applied for unemployment benefits last week. But the decline wasn't nearly enough to raise any real hope that the job market is getting better.
To get the economy going, President Barack Obama has proposed a $447 billion package of tax cuts, public works projects and benefits for the unemployed, but it faces major opposition in the Republican-controlled House.
While the market was falling Thursday, the president stood in front of an aging bridge that connects Ohio and Kentucky. He exhorted Republicans: "Help us put this country back to work. Pass this jobs bill right away."
If Congress fails to pass the jobs bill, it would leave the Fed action this week as the only major new initiative designed to help the economy.
The Fed announced Wednesday that it would shuffle $400 billion of its own holdings in hopes of reducing interest rates on long-term loans.
The U.S. economy grew at an annual rate of 0.7 percent in the first half of this year, the slowest growth since the end of the Great Recession in June 2009. It would take much healthier growth, 4 or 5 percent, to bring unemployment down significantly.