U.S. financial markets took a big hit on Thursday, with both stocks and commodities suffering massive sell-offs, as the Federal Reserve's bleak outlook on the economy and poor economic data added to fears of a double-dip recession.

Markets in turmoil

Losses were across the board in equity market, with basic materials and energy shares hurt the most.

The Dow Jones industrial average closed down 391.01 points, or 3.51 percent, to 10,733.83, after the blue-chip index nosedived as much as 528 points during the session.

All 30 Dow components ended firmly in the red, with United Technologies Corporation plunging 8.76 percent to lead the decliners.

The broader Standard & Poor's 500 plunged 37.20 points, or 3.19 percent, to 1,129.56, with more than 100 of its companies hitting their 52-week lows intraday.

The Nasdaq Composite Index plummeted 82.52 points, or 3.25 percent, to 2,455.67. Now, major indexes were on track to their worst week in nearly three years.

Investors were pouring out of stocks, however, they found very few places to hide. Gold, usually regarded as safe-haven assets, dropped about 70 dollars, or 4 percent an ounce, while silver freefell an astounding 11 percent in a single day. Meanwhile, with fears of weaker demand intensifying, copper plunged over 8 percent to hit a one-year low, and oil prices settled down 6.3 percent after falling below 80 dollars a barrel for the first time in more than a month.

Recession fears weigh

Thursday's sell-offs officially started after the U.S. Federal Reserve announced Wednesday that it will replace 400 billion U.S. dollars short-term Treasury securities with long-term debt, known as "Operation Twist" in an effort to lower long-term interest rates and stimulate the economy.

However, the move by the central bank failed to lift the markets as the Fed gave a gloomy view about the economic outlook in its statement.

In its highly-anticipated statement, the Fed said a complete economic recovery was still years away, adding that the United States economy has "significant downside risks to the economic outlook, including strains in global financial markets," which made people fear that the central bank's bold move is the evidence of a worsening economy.

News outside the United States was also disturbing. Data showed Germany's and France's Purchasing Manager Indexes (PMI) in September dipped to their lowest levels since 2009, showing the economy in eurozone's two economic giants were losing steam. The HSBC China Flash PMI showed China's factory sector contracted for a third consecutive month in September, inevitably added to the fear.

The Chicago Board Options Exchange Volatility Index, known as the VIX or the "fear index" soared nearly 11 percent to 41.35. The gauge has been rising about 33 percent in the past four days, reflecting growing concerns over global economic woes.