Dow plunges over 400 points in one day, erasing all of 2014's gains

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Investors' 2014 stock gains have evaporated under a broad-based Wednesday selloff as fears over the slowing global economy, corporate earnings and the spreading Ebola virus rattles already skittish investors.

The Dow Jones Industrial average plunged 407 points (2.5%) to 15,907 in afternoon trading. The Standard & Poors 500 was down 2.6% to 1,827, while the Nasdaq was off 2.2% to 4,130.

Wednesday's carnage - which marked the fifth straight drop in the Dow - began in Europe, where Britain's FTSE fell 1.9% and Germany's DAX and France's CAC 40 sank nearly 3% after Germany lowered its growth projections. But investors were also unnerved by fresh Ebola fears and weaker-than-expected U.S. economic data, including a Commerce Department report that September retail sales fell 0.3%.

Selling pressure hit a broad array of stocks. Banking and financial stocks, including Bank of America, down 4.5%, Citigroup, off 5%, and JP Morgan, down 3.7%, were particularly hard hit.

Airline stocks were roiled by the prospects of curtailed travel due to the spreading Ebola virus. United Continental fell 6%, American Airlines was off 4.3% and Delta tumbled 4.7%. Among tech stocks, Intel fell 3% and Microsoft slipped 2%.

Volatility, which has dominated much of October trading after months of relative calm, dominated trading sentiment again Wednesday, with the Dow gyrating a swing of nearly 600 points. Investors fled for the safety Treasury bonds, pushing the yield on 10-year notes below 2% to as low as 1.85%, lowest since May 2013.

"Overwhelmingly bad news is outweighing good news at the moment," says Karyn Cavanaugh, senior market strategist at Voya Investment Management. All the global growth worries are impacting the markets. This is especially the case with Germany which has taken a rapid turn for the worst. Until now, Germany was propping up Europe. Today's retail sales data was not good nor was the discovery of the second case of Ebola'' in Dallas.

"It's hard to square the drop in underlying sales with the strengthening labor market and the boost to real incomes from lower gasoline prices," said Paul Diggle, an economist at Capital Economics. "As such, we expect sales growth to strengthen again before too long."

Market strategists said news that AbbVie was reconsidering a potential $55 billion takeover of fellow drugmaker Shire also rattled the markets.

U.S.-based AbbVie said in a release late Tuesday that recent moves by the U.S. Treasury Department to clamp down on so-called tax inversion deals might make acquiring Shire less attractive. Shire is headquartered in Ireland. Tax inversions allow U.S. companies to nominally move operations overseas to trim taxes. AbbVie was off 2%, while Shire sank 32% to $166.29.

Among the day's bright spots, protective body suit maker Lakeland Industries, up 20% to $25.75 on speculation of increased sales due to Ebola.

Short term, a fresh round of corporate earnings reports could reverse the broad market carnage.

"I believe some decent earnings reports, which we are expecting, can help reverse this pattern, " says Christine Short of earnings tracker Estimize.

Estimize forecasts third-quarter earnings for S&P 500 companies to come in at about 9%, which would represent solid growth. Still, Short says improving economic outlook in Europe and China will be needed to support long term market strength.

Sam Stovall, chief equity strategist at S&P Capital IQ, says selling pressures may not ebb soon.

"I still think the S&P 500 needs to fall by more than 10% to reset its dials," says Stovall. "That would bring the S&P 500 down to 1810."

The S&P 500 has gone more than 36 months without a decline of 10% or more, which is more than double the 18-month average since World War II.