The noose tightened on the slowing US economy, sending stocks tumbling nearly 360 points on the Dow Jones average and skidding to even steeper losses abroad.
The 9.4 percent slide this month makes it the worst June for stocks since the Great Depression.
Investors blame a mix of surging oil prices, the weak dollar and not enough money to keep Wall Street banks flush against growing write-offs.
Rising unemployment checks here, along with deeper fears of inflation across the globe also dragged down prospects for any significant corporate profits this year.
Kicking off the global stock rout was a stream of bad news at America’s giant companies, starting with Citigroup’s likelihood of an $8.9 billion writedown and possible dividend cut in the next quarter and a possible writedown at Merrill Lynch of $3.5 billion over its bad bets.
General Motors also dragged down the blue chips after analysts said the impending collapse of Detroit’s truck-heavy auto industry will force GM to find more capital.
By the end of yesterday’s stormy session, all major stock markets across the globe were languishing in double-digit losses as steep as 24 percent for the year in Europe, and nearly 14 percent here for blue chips.
The Dow Jones industrial average closed 3.03 percent lower, or 358.41 points, to 11,453.42.
The Standard & Poor’s 500 index fell 2.94 percent to 1,283.15, off 38.82. The Nasdaq lost 3.33 percent to 2,321.37, down 79.89.
Meanwhile, the Commerce Department said the economy grew at a limp 1 percent in the first quarter, which would have been worse except for the higher sales of US goods abroad made cheaper by the weak dollar.
Analysts fear the economy could hit a rougher patch ahead.
“The economy is far from out of the woods,” said Nigel Gault, chief US economist at Global Insight. He predicted second- and third-quarter economic growth would benefit from the tax rebates but he believes there will be a “relapse” in the final quarter of this year as the effect of the rebates wanes.
A government report said the number of people continuing to draw unemployment benefits climbed to 3.1 million, the most in more than four years.
Employers have cut jobs each month so far this year as they cope with fallout from high energy prices, the housing slump and harder-to-get credit.
The National Association of Realtors said home prices continued to sink, with the median sale price in May dropping 6.3 percent from a year ago to $208,600.
Builders in the first quarter cut their output by 25.2 percent, the most in 26 years, the Commerce Department said.
Oil prices hit new highs, passing $140 a barrel to settle at a record $139.64 a barrel.
OPEC President Chakib Khelil told a French television station that oil could rise to between $150 and $170 per barrel this summer before pulling back later in the year.