By Abhiram Nandakumar
US stock indexes have plummeted in morning trade as investors spooked by the health of the global economy jettisoned stocks and fled to safe-haven assets.
All three major indexes were down more than 1 percent on Thursday (local time), led by financials, especially banks. All 10 major S&P sectors were lower.
Federal Reserve Chair Janet Yellen on Wednesday acknowledged tightening financial conditions and uncertainty about China and the risks that posed to the US economy, but still kept open the possibility of further interest rate hikes.
Globally, stocks fell sharply on Thursday. The dollar hit a 16-month low against the yen and investors migrated to gold and top-rated bonds.
US Treasury security yields plunged to levels not seen since 2012 in some cases.
Prices on fed fund futures, used to predict future policy rates by the Fed, surged as investors further cut back expectations of another rate hike anytime soon after the first US rate hike in nearly a decade in December.
"The market is transitioning and attempting to stand on its own two feet. Central banks in general have been the market's protectors over the last 8 years," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
At 9.35am ET, the Dow Jones industrial average was down 248.09 points, or 1.56 percent, at 15,666.65.
The S&P 500 was down 26.72 points, or 1.44 percent, at 1,825.14 and the Nasdaq Composite index was down 56.69 points, or 1.32 percent, at 4,226.90.
Financials, already the worst performing S&P sector this year, was the biggest loser on Thursday. The sector dropped 2.9 percent.
Bank stocks was down 3.6 percent, led by JPMorgan's 3.6 percent fall.
Shares of Twitter were down 5.4 percent at US$14.20 after the company reported its first quarter with no increase in users since it went public.
Cisco was up 9.5 percent at US$24.63 after reporting a bigger-than-expected profit. The stock was the only gainer on the Dow and giving the biggest boost to the S&P 500 and the Nasdaq.
Mylan was the biggest loser on the S&P 500, falling 14.5 percent to US$42.97 after saying it would acquire Meda in a US$7.2 billion deal.
At one point Dow futures were down more than 300 points, following the weakness in Europe and Asia. "300 as Europe" became one of the top 10 trending items on Twitter in the United States.