Stocks Sink on Fears of Global Recession

"Obviously the U.S. got caught in some of that in the preopening," he continued. Premarket futures for the major averages hit their limit lows before the open, logging their maximum possible losses and triggering a cessation in the selling.

"Maybe this is the final capitulation," said Strauss, who added that the market isn't necessarily reacting to gloomy economic data. "Everyone's expecting the numbers to be weaker. Tell me who's not expecting weaker GDP in the U.S."

Considering the turmoil, Nouriel Roubini, an economics professor at New York University, believes hundreds of hedge funds could collapse and that financial markets might need to be temporarily shut down in order to stem the massive asset selling, Bloomberg reported.

Volatility has reached new heights. The CBOE Volatility Index blasted off to an intraday record of 89.53 and was lately up 15% to 78.20.

The credit crunch was once again in focus. Bloomberg reported that the Treasury Department was ready to invest in regional banks as part of a $250 billion effort to capitalize banks. The Treasury already dedicated $125 billion on nine of the biggest U.S. banks.

Meanwhile, U.S. equities weren't the only asset class in deep trouble during the final session of the week. Crude oil was dropping $2.94 to $64.90 a barrel, despite an announcement by OPEC that it would reduce production by 1.5 million barrels a day in an effort to support falling prices. Gold was climbing $17.90 to $732.60 an ounce.

After rocketing ahead in early action, longer-dated U.S Treasury securities were mixed. The 10-year note was up 8/32, yielding 3.65%. The 30-year was losing 6/32 to yield 4.06%.