Dow sinks below 23,000; Nasdaq flirts with a bear market; Oil in free fall

The Dow briefly plunged below 23,000 on Thursday and the Nasdaq is flirting with a bear market. US oil prices plummeted more than 4% to the lowest level since August 2017.

The latest wave of selling shows how worried investors have become about the eventual demise of the economic expansion. Those jitters were exacerbated by concerns that the Federal Reserve is making a mistake by continuing to raise interest rates.

"Equity markets are quickly approaching the capitulation phase after having broken below critical support," Sam Stovall, chief investment strategist at CFRA Research, told CNN Business.

At Thursday's lows, the Nasdaq was briefly on track to close 20% below the closing high set on August 29. It's premature to say the Nasdaq is in a bear market: Market analysts tend to calculate bull and bear markets using closing numbers.

But if the Nasdaq closes in a bear market, it would join a growing list of downturns in risky assets. The trade war helped knock China's stock market into a bear market over the summer. Worries about a supply glut knocked oil into a bear market last month.

More recently, two economically-sensitive areas have succumbed to the bear: the Russell 2000 small-cap index and the Dow Transportation Index.

Signs of fear are flashing in financial markets. The VIX volatility index climbed on Thursday to the highest level since February, when the Dow suffered two 1,000-point plunges in one week. The CNN Business Fear & Greed Index of market sentiment dipped deeper into "extreme fear" territory.

Investors hoping to get rescued by the Fed were left disappointed by the central bank's statement and Jerome Powell's press conference on Wednesday. The Fed dialed back its 2019 rate hike projections, but struck a more optimistic tone than signaled by the market. And Powell suggested the Fed will keep shrinking its balance sheet despite the market mayhem.

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