Investing.com -- U.S. stocks suffered their worst single session in six weeks on Thursday, amid heightened fears of an impending global economic slowdown, as a surge in the Japanese yen against the dollar dragged down banking stocks and major indices worldwide.
The dollar crashed more than 1.5% versus the yen, suffering its fifth straight daily loss, to hit a fresh 17-month low at 107.69. It came as investors expressed concerns that the Bank of Japan's current negative interest rate regime might not be enough to prevent one of the world's largest economies from entering an extended period of deflation. Meanwhile, investors which borrowed cheaply in the yen months ago while capitalizing on the carry trade incurred sharp losses on Thursday. Under the strategy, the investors borrowed yen at a deep discount, then invested the proceeds in stocks and bonds in the U.S. and the euro zone in an effort to capitalize on higher yields. The strategy is effective when the currencies remain constant, but can lead to significant losses when the dollar falls sharply in relative value against the yen. When the yen reverses, investors are forced to close out their positions leading to further losses.
The Dow Jones Industrial Average plunged 174.09 or 0.98% to 17,541.96, falling as much as 223 points at session lows. The NASDAQ Composite index lost 72.35 or 1.47% to 4,848.37, as pharmaceutical stocks retreated from a significant rally earlier this week, while the S&P 500 Composite index crashed 24.75 or 1.20% to 2,041.91. On the S&P 500, all 10 sectors closed in the red, as Financial and Telecommunications stocks lagged. In total, six industries closed down by more than 1% in Thursday's session. With the losses, the S&P 500 closed in negative territory for the year.
The top performer on the Dow was United Technologies Corporation (NYSE:UTX), which inched up 0.52 or 0.52% to 100.89. Shares in the multinational conglomerate are still down nearly 15% this year. The worst performer was Goldman Sachs Group Inc (NYSE:GS), which fell 4.78 or 3.08% to 150.41. A number of major banks tumbled throughout the session, as Citigroup Inc (NYSE:C), Bank of America Corporation (NYSE:BAC) and Deutsche Bank AG (DE:DBKGn) NA O.N. (NYSE:DB) also fell more than 3%.
The biggest gainer on the NASDAQ was Cerner Corporation (NASDAQ:CERN), which added 0.75 or 1.36 to 55.98. Earlier on Thursday, hospital management corporation Universal Health Systems announced that it is replacing its antiquated revenue cycle management system for an innovative Millennium Revenue Cycle program designed by Cerner. The worst performer was Alexion Pharmaceuticals Inc (NASDAQ:ALXN), which plummeted 8.99 or 5.73% to 148.03, retreating from sharp gains from earlier in the week.
The top performer on the S&P 500 was Wynn Resorts Limited (NASDAQ:WYNN), which surged 10.44 or 11.66% to 99.99, after CEO Steve Wynn announced plans to transform its Wynn Golf Club in Las Vegas to two separate casinos. The worst performer was Freeport-McMoran Copper & Gold Inc (NYSE:FCX), which fell 0.76 or 7.91% to 8.85. The mining giant suffered severe losses after copper futures fell by more than 3% on the session.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,400-684 margin.