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Updated: November 10, 2011 4:57PM

Fears at home and abroad rattled the stock market Thursday, with all three major indexes closing down more than 3 percent — the biggest percentage losses since Aug. 18 — and 10-year Treasury yields plunged to 1940s levels as gloomy economic news rattled investors.

The Dow fell 391.01 points, or 3.5 percent, to end the day at 10,733.83. It was its lowest close since Aug. 10. The Standard & Poor’s 500-stock index fell 37.18, or 3.2 percent, to 1,129.58. The Nasdaq composite fell 82.52, or 3.3 percent, to 2,455.67. Commodities dropped fell, including, oil,which dropped more than $5 a barrel to $80.51.

Selling started in Asia and picked up speed in Europe, as Greece continued to struggle to right its debt crisis and China’s manufacturing activity slowed. That piled onto the Federal Reserve actions Wednesday and was followed by other U.S. news, including FedEx’s cautionary outlook and billionaire investor George Soros’ comments on CNBC that the United States is already in a recession, said Chicago economic experts.

“Buckle your seatbelt. It’s going to be a rocky ride both to the upside and to the downside” as such volatility continues, said Paul Larson, chief equity strategist for Chicago-based Morningstar.

Though the mixture of news prompted the market swings, Larson said the biggest concern is the European debt crisis and Greece in particular.

“Greece is just a train wreck right now, given its high debt relative to its economic activity,” he said. “There is a fear that September 2011 will be like September 2008, but instead of Lehman Bros., we now have Greece,” Larson said, referring to the Lehman Bros. bankruptcy filing three years ago that shook American finance.

The CBOE Market Volatility Index, or VIX, known as a fear gauge, soared 10.8 percent from Wednesday to a one-month high of 41.35, after tamping down from an intraday high of 43.87. The VIX has ranged from intraday swings of 14.27 on April 28 to 48 on Aug. 8.

“The market is saying that it is expecting higher than average volatility for the next five to six months,” said Ben Londergan, CEO of Group One Trading, a Chicago proprietary options market making firm.

“It could move from 1.5 to 2 percent per day.”

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