With investors concerned over banks' ability to pay back debts as the credit crunch worsens, the Dow Jones Industrial Average closed 449.36 points down yesterday, a 4.06 per cent decline.
The European indexes also suffered falls, with the Cac 40 off 2.14 per cent, the FTSE 100 down by 2.25 per cent and the DAX falling by 1.75 per cent - with financial stocks leading the declines.
In Russia the situation was worse still, with the Moscow exchange closing due to the decline in sentiment.
Asian markets are showing few signs of recovery this morning, with the Hang Seng down 435.69, or 2.47 per cent, at 03:21 ET.
News of the stock drops comes as the International Monetary Fund suggested further bank failures in the near future, as the credit crisis continues.
Dominique Strauss-Kahn, head of the organisation, added: "The speed and scale of these events have added to short term uncertainties and further significant financial strains cannot be ruled out."