Investors are seeking shelter in investments like gold and the dollar as stocks tumble on fresh concerns about soured loans at banks.
Gold prices spiked while more economically sensitive commodities like energy and agriculture futures plunged.
Meanwhile, the dollar gained footing against other major currencies.
The move back into gold, and an extension of recent gains for the dollar, came amid frenzied selling on Wall Street as doubts grew about banks' recent profit reports. Many investors are worried that the better-than-expected results from banks like Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and Goldman Sachs Group Inc. are not sustainable.
Many banks have attributed the recent improvement in results to a spike in mortgage banking and trading activity, trends that aren't expected to last. And credit losses keep rising as consumers and businesses struggle to pay off their debt.
The decline in stocks comes after six weeks of massive gains that have carried the Dow Jones industrial average up nearly 25 percent from a 12-year low. That rally, sparked by optimism that the financial system's health was improving, curbed demand for safe-haven assets like gold and boosted prices for other commodities like oil.
But after such a huge advance, and with many more earnings reports from companies pouring in this week, investors are worried that the market may have gotten ahead of itself.
«The pendulum is swinging once again toward the notion that we're not bottoming out in terms of the economy," said Edward Meir, senior commodities analyst at MF Global in New York. „ It's a wake-up call that things are not stabilizing as we thought they were.“
The renewed uncertainty about the economy pushed investors toward the saftey of gold.
Gold for June delivery added $19.60 to settle at $887.50 an ounce on the New York Mercantile Exchange.
May silver jumped 31.5 cents to $12.1050 an ounce, while July copper futures fell 9.25 cents to $2.1050 a pound.
Energy prices plunged on the Nymex, mirroring the decline on Wall Street.
Light, sweet crude for May delivery fell $4.45 to settle at $45.88 a barrel — the lowest level in more than a month.
Gasoline for May delivery slid nearly 9 cents to $1.403 a gallon and heating oil fell by 8.75 cents to $1.3350 a gallon.
Grain prices slumped on the Chicago Board of Trade.
July wheat futures fell 18.5 cents to $5.1625 a bushel, while corn for July delivery lost 7 cents to $3.7875 a bushel.
July soybeans dropped 30 cents to $10.1150 a bushel.