By Saumya Vaishampayan 

Stock markets around the world tumbled, with the Dow industrials near their lows of the year, and government bonds rallied Wednesday as fears about the health of the global economy deepened.

Investors have been concerned about softness in Europe, Japan and China for months. And while U.S. growth has remained buoyant--third-quarter GDP expanded by 5%--it is unclear whether it can withstand the drag from overseas. Slower economic growth dims the prospects for corporate-profit growth, a driver of stock-market gains.

The Dow Jones Industrial Average fell 275 points, or 1.6%, to 17339.

Bill Nichols, head of U.S. equities at Cantor Fitzgerald, said there was no sense of panic among investors selling stocks Wednesday. He added that while volatility is heightened, it's not out of place in comparison with historical moves. "We kind of got so used to muted volatility that when you see a 1% or 2% intraday swing it stands out, but historically you saw more of those over the years," he said.

Investors sought haven assets such as U.S. government bonds. The yield on the 10-year Treasury note dropped to 1.812% from 1.890% on Tuesday. On Wednesday, the yield on the 30-year bond hit as low as 2.375%, breaking the 2.439% set in July 2012, which had been the lowest intraday yield for the maturity on record. Yields fall as prices rise.

Prices for copper, which is often viewed as a bellwether for global growth, hit a 5 1/2 -year low on Wednesday. Crude-oil futures fell 0.5% to $45.68 a barrel. Those prices have plunged since last summer.

"When we see these big drops [in commodity prices] investors start worrying about global demand, and therefore future global growth," said Chris Gaffney, senior market strategist at EverBank Wealth Management.

Market action has become more volatile in recent sessions, as investors consider the pace of global growth, potential changes in monetary policy at major central banks, and fourth-quarter earnings season. On Tuesday, the Dow industrials posted its biggest intraday swing since October. The S&P 500 has had three moves of 1% or more this January through Tuesday's close, compared with a total of five such moves in January 2014.

The S&P 500 index lost 26 points, or 1.3%, to 1997 and the Nasdaq Composite declined 47 points, or 1%, to 4615.

Energy stocks fell the most on the S&P 500, down 2.2%. Financial stocks on the S&P 500 fell 1.9%, weighed on by weaker-than-expected earnings results from J.P. Morgan Chase & Co. Other losing sectors included the growth-sensitive materials stocks, down 2%.

Stocks in the utilities sector, often viewed as safe bets, added 0.1%. Real-estate investment trusts stocks rose 0.4%.

Adding to the negative tone, U.S. retail sales showed that consumers had pulled back on spending. Many economists expect that the monthslong decline in fuel prices should prompt consumers to spend more, a factor that could propel the U.S. economy.

Retail sales declined 0.9% in December from a month earlier, the Commerce Department said Wednesday. That marked the largest monthly decline since January 2014. Spending fell 0.4% excluding gasoline sales, and declined 1% when removing the volatile autos category. Economists surveyed by The Wall Street Journal had predicted overall sales to fall 0.2% and sales excluding autos to also fall 0.2%.

"The retail sales number was disappointing," said Michael Arone, State Street Global Advisors' chief investment strategist. "It's going to take a little time for the declines in oil to find their way into spending," he said. He noted, however, that the data tend to be choppy and often have significant revisions.

The firm has reduced some of its exposure to stocks recently, though it remains overweight to stocks, including U.S. large-cap stocks, Mr. Arone added.

The sales report came a day after the World Bank cut its outlook for global growth in 2015.

In other commodity markets, gold futures added 0.4% to $1239.70 an ounce.

European stocks fell, pushing the Stoxx Europe 600 down 1.5%. Mining stocks were hit hard. The 10-year German bond yield hit a record low of 0.43% on Wednesday.

European stocks fell despite an opinion from an adviser to Europe's top court that appeared to clear the way to a large-scale program of bond purchases by the European Central Bank.

Among individual stocks, bank earnings stole the spotlight. J.P. Morgan Chase & Co. said its fourth-quarter profit and revenue fell as the firm faced high legal costs. Results missed Wall Street expectations. Shares fell 4.6%.

Wells Fargo & Co. said fourth-quarter net income rose 1.8% on the back of stronger loan growth. Still, shares fell 2% as a key measure of lending profitability continued to tick lower.

Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com

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