By Anora Mahmudova and Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock investors scrambled for the exits on Thursday, sending the Dow Jones Industrial Average down 335 points, its worst one-day point plunge in more than a year.

The S&P 500 (SPX) fell 40.68 points, or 2.1%, to 1,928.21, its biggest one-day percentage drop since April 10. The Dow Jones Industrial Average (DJI) slid 334.97 points, or 2%, to 16,659.25, marking its fourth drop of more than 300 points this year. The Nasdaq Composite (RIXF) fell 90.26 points, or 2.2%, to 4,378.34.

Thursday's brutal losses came on the heels of a 275-point rally, which marked some of the sharpest gains the market had seen in months. Wednesday's gain followed a 273-point plunge on Tuesday. Those topsy turvy movements highlight what's been a frenetic series of trading sessions in the past several months.

As selling intensified, volatility on the S&P 500 as measured by the CBOE VIX (VIX) index jumped 23% to 18.59, the highest level since February. Volatility metrics like the VIX serve as a gauge of current fear in the market.

The carnage hit small-cap stocks the hardest, with the Russell 2000 (RUT) falling 29.13 points, or 2.7%, to 1,067.99, its lowest level in nearly a year. Also read: Small-cap carnage vindicates bears for now.

Analysts said selling might have been triggered partly by disquieting comments from European Central Bank President Mario Draghi, while others said stocks just got ahead of themselves with Wednesday's big rally.

Draghi said "Europe's problems are structural, not cyclical, and without reforms there can be no recovery. I think this is weighing a bit on the market," said Peter Cardillo, chief market economist at Rockwell Global Capital. (Read more: Draghi doesn't take new steps http://blogs.marketwatch.com/capitolreport/2014/10/09/live-blog-and-video-of-draghi-and-fischer-discussing-europe/.)

Meanwhile, prominent activist investor Carl Icahn might also have fueled the slide in stocks. The billionaire investor told CNBC that a market correction is "definitely coming," adding that he's hedging his stock bets by shorting the S&P 500.

All 30 stocks in the Dow Jones Industrial Average were down with declines in Caterpillar Inc. (CAT) Goldman Sachs (GS), Visa (V) and Chevron (CVX) weighing heavily on the price-weighted index.

Government data showed the number of people applying for unemployment benefits was below 300,000 for the fourth week in a row.

Need to Know: A call to short chip makers in the face of a scary triple-top market.

Stocks to watch: Gap Inc shares slumped 12.5% after the retailer reported a drop in same-store sales. The company said chief executive and chairman Glenn Murphy will retire in February 2015. Art Peck, president of the growth, innovation and digital division, will succeed Murphy as CEO.

Alcoa Inc. shares (AA) fell 4.4% in regular trading despite the aluminum producer beating Wall Street's third-quarter earnings earnings estimates as stocks were dragged down amid the selloff.

Meanwhile, Apple Inc. (AAPL) suppliers have delayed plans to mass produce a larger-screen tablet early next year, according to a Wall Street Journal report.

Carl Icahn's issued a letter to Apple before the opening bell pushing the Apple to return more cash to shareholders and arguing that the share price of the iPhone maker should trade at $203 a share. Apple shares gained 0.6%.

Google Inc.'s (GOOG) tax deal in France is being challenged, according to a Wall Street Journal report. Shares fell 28%.

Other markets: In Asia, Japan's Nikkei Average fell as the yen strengthened against the greenback. Gold prices (GCZ4)surged, while oil futures (CLX4) dropped.

MarketWatch's Carla Mozee in London contributed to this article.

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