“This view seems to have deteriorated somewhat with the S&P 500 closing below its multi-month trading range – a fate the credit markets and US yield curve have been screaming for some time”.

The Dow Jones Industrial Average fell more than 500 points, as is down 10 per cent from its record high in May. That selling soon spread to European and U.S. markets, where the Standard & Poor’s 500 index moved further below a closely watched trading level.

Hong Kong’s Hang Seng Index dropped 1.3 per cent, taking declines since an April high beyond 20 per cent. The Shanghai Composite Index slumped 4.3 per cent, bringing the week’s loss to more than 10 per cent and coming within one point of erasing all gains since the government began efforts to prop up the market in July. “Should sellers find no state buying, particularly near the end of the trading session, they may be inclined to push lower”.

As the selling picked up Thursday, investors moved money to traditional havens in times of uncertainty. France’s CAC-40 fell 3.2 percent while Germany’s DAX lost 2.9 percent.

The tech-heavy Nasdaq composite index lost 141.56 points, or 2.8%, to 4,877.49, but it’s still up 3% for the year.

Back in the U.S., government bond prices rose, pushing the yield on the 10-year Treasury note to 2.04 percent.

CHINA CONCERNS: Worries over China, the world’s second-largest economy, were again the catalyst for Thursday’s losses. Chinese shares have had a wild ride this week and that has raised questions about Beijing’s ability to stabilize the market and the devaluation of that nation’s currency.

Oil is a lifeline of economic growth for many developing countries, which are also seeing their currencies lose value because of their economic exposure to China.

The S&P 500 suffered its biggest daily percentage drop in almost four years and the Dow confirmed it had entered into correction territory as fears of a China-led global slowdown rattled investors around the world. While many investors pick and choose stocks based on a company’s business outlook, there is an entirely different class of trader who relies on technical indicators to make investment decisions.

“I see this drop as likely because we crossed the 200-day moving average, and that’s causing us to have further selling”, said Scott Wren, chief global equity strategist at the Wells Fargo Investment Institute.

Media stocks were hit hard, which exacerbated the broader market selloff. The Nasdaq is precariously close to being in a correction, down 9.8 percent from its most-recent high, but that is not by definition a correction.

Viacom, owner of CBS, fell 6 percent as well, and Twenty-First Century Fox fell 4 percent. Disney was the biggest drag on the Dow Jones industrial average. Netflix, which is up about 130 percent since January, fell 8 percent.

Shares in major Japanese exporters were also hard-hit as the yen strengthened against the dollar, with Bridgestone losing 3.2 percent and Toyota shares falling 3 percent. The drug Addyi was approved Wednesday by U.S. regulators.

The US oil benchmark West Texas intermediate dropped 4.3% to settle at 40.80 a barrel on the New York Mercantile Exchange after the U.S. Energy Administration reported an increase in crude oil stockpiles from last week.

– Wholesale gasoline rose 1 cent to close at $1.545 a gallon. On the Nasdaq, 1,905 issues fell and 440 advanced. Heating oil fell 2.2 cents to close at $1.496 a gallon.