Weak economic news from China, the US, and Spain combined with a slump in oil companies sent stocks sharply lower. The Dow Jones industrial average had its biggest one-day drop since August. It fell 228 points, or 1.9%, to close at 11,984, while the S&P 500 index fell 24, or 1.9%, to 1,295, and Nasdaq fell 50, or 1.8%, to 2,701.
Investors were jarred when China reported a surprise trade deficit. Moody's, meanwhile, downgraded Spain's debt, re-igniting fears about Europe's debt crisis. And in the US, the government reported that new applications for unemployment benefits rose more than expected last week.