(Source: Associated Press/AP Online)
By STAN CHOE
NEW YORK - Stocks plunged again Wednesday as investors turned their attention back to the weak global economy and Europe's debt problems. Most of the big gains that followed a Federal Reserve pledge to extend super-low interest rates vanished.
The Dow Jones industrial average fell 345 points, or 3 percent, to 10,895 in early afternoon trading. The average plummeted more than 300 points within minutes of the opening bell and was down as many as 456 points by late morning.
On Tuesday, the Dow gained 429 points after the Fed said it planned to keep interest rates extremely low at least through the middle of 2013. It was the first time the Fed announced such a timetable.
But by Wednesday, investors were focused on the pessimistic side of the Fed's announcement: The central bank expects the economy to stay weak for at least two more years.
"Investors are still trying to discern whether it's going to be a double-dip recession or just a slowdown," said Oliver Pursche, president of Gary Goldberg Financial Services.
The Standard & Poor's 500 fell 32 points, or 2.8 percent, to 1,140. The Nasdaq fell 61, or 2.5 percent, to 2,421.
Gold set yet another record price as money poured into investments considered safe at an extremely volatile time for the financial markets. Gold rose $44 per ounce to $1,787 and briefly rose to $1,800 per ounce.
The 10-year Treasury note, which has also served as a haven, also rose sharply. Its yield fell to 2.16 percent from 2.26 percent late Tuesday. It had reached a record low of 2.03 percent on Tuesday. A bond's yield falls when its price rises.
Investors have bought U.S. government debt even after S&P stripped the United States of its top credit rating, AAA, late last week.
On top of concerns about the U.S. economy, attention is still on Europe, where investors worry that Italy and Spain may be the next countries unable to repay their debts.
French President Nicolas Sarkozy cut short his vacation for emergency meetings with government minsters amid concerns that France could become the next AAA-rated country downgraded. The French CAC 40 stock index fell 5.5 percent. Societe Generale, France's second largest bank, was down more than 20 percent at one point.
The European financial system has been battered by fears about banks' holdings of bonds issued by heavily-indebted countries, such as Greece and Portugal.