NEW YORK — Just when Wall Street seemed to have settled down, a barrage of bad economic reports collided with fresh worries about European banks Thursday and triggered a global sell-off in stocks.
The Dow Jones industrial average fell 419 points — a return to the wild swings that gripped the stock market last week.
Stocks were only part of a dramatic day across the financial markets. The price of oil fell more than $5, gold set another record, the government's 10-year Treasury note hit its lowest yield, and the average mortgage rate fell to its lowest in at least 40 years.
The selling began in Asia, where Japanese exports fell for a fifth straight month, and continued in Europe, where bank stocks were hammered because of worries about debt problems there, which have proved hard to contain.
Today, stock markets in Asia opened sharply lower, following a day of sharp losses in markets around the world.
Japan's Nikkei 225 index was down 183.46 points, or 2.1 percent, at 8,760.30 in early morning trading.
Australia's benchmark S&P/ASX 200 index was down 117.2 points, or 2.8 percent, at 4,134.1, and New Zealand's NZX 50 fell 36.35 points, or 1.1 percent, to 3,249.86.
On Wall Street, the losses wiped out much of the roughly 700 points that the Dow had gained over five days. Some investors who bought in the middle of last week decided to sell after they were confronted with a raft of bad news about the economy:
* More people joined the unemployment line last week than at any time in the past month. The number of people filing claims for unemployment benefits rose to 408,000, or 9,000 more than the week before.
* Inflation at the consumer level in July was the highest since March. More-expensive gas, food, clothes and other necessities are squeezing household budgets at a time when most people aren't getting raises.
* Sales of previously occupied homes fell in July for the third time in four months — more trouble for a housing market that can't seem to turn itself around. This year is on pace to be the worst since 1997 for home sales.
* Manufacturing has sharply weakened in the mid-Atlantic states, according to a report from the Federal Reserve. Manufacturing has been one of the strongest parts of the economy since the recession ended in 2009, but its growth has slowed this year.
The manufacturing news was especially bleak on an already bad day, said Dan Greenhaus, chief global strategist at brokerage BTIG. He called the Fed report "an atrocious set of numbers."
"That really set the market on its head," he said.
Wall Street and other financial markets have wrestled for several weeks with fears that a new recession might be in the offing. Morgan Stanley economists said in a report Thursday that the U.S. and Europe are "dangerously close to recession."
"It won't take much in the form of additional shocks to tip the balance," they wrote.
Worries about European debt also hang over the market. A default by any country would hurt the European banks that hold its bonds, plus American banks that have lent to their European counterparts.
Renewing the fears, The Wall Street Journal reported Thursday that U.S. regulators are looking at the U.S. arms of big European banks to make sure they have enough money for day-to-day operations.
"I don't want to pretend that the market knows what it's thinking about too much," said David Kelly, chief market strategist at JPMorgan Funds. "We live in an environment of sell now and ask questions later."
Asian markets started Thursday's drop. Japan's Nikkei 225 index fell 1.3 percent. The main stock indexes in South Korea and India each dropped a little more, then Europe more than that — 4.5 percent in Britain and 5.8 percent in Germany.
In the United States, the Dow fell 419.63 points, or 3.7 percent, to 10,990.58. The Standard & Poor's 500 index fell 53.24, or 4.5 percent, to 1,140.65. The Nasdaq composite fell 131.05, or 5.2 percent, to 2,380.43.
The Dow is down 13.6 percent since stocks began falling July 21 — four weeks that have rattled Americans watching their retirement savings and other investment accounts shrivel.
With stocks down big, money flooded into U.S. Treasurys and gold, both considered safer investments.
The yield on the 10-year Treasury note briefly fell below 2 percent for the first time. It hit 1.98 percent before rising to 2.07 percent. Investors are willing to accept a lower return on their money in exchange for safety.
The price of gold reached yet another high — $1,829.70 per ounce. Gold keeps setting records because some investors are looking for stability and others are simply looking to cash in.
The price of oil fell $5.20 to $82.38 a barrel after the economic reports raised concern among traders that demand for gasoline would fall. One survey this week found Americans have already cut back on gas 21 weeks in a row.