A wave of selling washed across the financial world Thursday, driving the stock market down, pushing interest rates up and bringing new concern that the forces propping up growth are in danger of fading.
The U.S. stock market closed Thursday down 2.5 percent following a 1.4 percent drop Wednesday — but those declines did not capture the sense of fear that roiled trading floors from Wall Street to London to Tokyo this week. The very underpinnings of a four-year bull market seemed to be coming unglued. An index of expected future market volatility soared 23 percent, to its highest level since the fiscal cliff standoff at the end of last year.
Anxiety was only deepened Thursday by a manufacturing survey suggesting new economic weakness in China — creating a feedback loop in which fear of a global slowdown spooked markets and the teetering markets raised concern about a global slowdown.