All three major U.S. indexes fell roughly 2% Thursday as investors fled the market on fears of slowing global growth and rumors of an imminent Moody's downgrade of major global banks.

Analysts at Goldman Sachs compounded fears when they sounded alarm bells over the health of the stock market late Thursday morning. In a report, analysts told investors to short, or sell, the S&P 500 until it falls at least 5% below current levels.

Adding to investors' fears, an audit of Spanish banks showed that the government plans to request up to €62 billion of aid for the ailing nation's banks. All these factors created a perfect storm to prompt a sharp sell-off.

"Traders and investors are really spooked today," said Sal Arnuk, co-head of equity trading at Themis Trading.

Still, Arnuk cautioned that trading volume remained light, which can cause some wild gyrations.

The Dow Jones industrial average lost 251 points, or 2%. The S&P 500 fell 30 points, or 2.2%. The Nasdaq slipped 71 points or 2.4%.

Commodity prices fell even more precipitously than the stock market, with gold, copper and oil dropping more than 2%. Oil prices continued to hit new lows, falling below $80 a barrel for the first time since early October. Silver fell more than 5%.

Commodity-related stocks took a big hit, with shares of Exxon Mobil, Chevron and Alcoa among the Dow's biggest decliners. All 30 Dow stocks with the exception of Merck and Verizon ended the day lower.

Bank stocks also sold off sharply, with Bank of America, Citigroup, Goldman Sachs, and JPMorgan Chase all dropping more than 2%. Morgan Stanley, the bank subject to the largest possible downgrade, fell less than its peers, at 1.7%.

Early Thursday, a report showed Chinese manufacturing fell to a seven-month low -- a sign that factories there are being hit by sluggish demand, according to a preliminary reading of the HSBC Manufacturing Purchasing Managers' Index.