Anxiety erupted in the markets Thursday as investors seized on bad news in Europe and, for the first time, China to confirm their worst fears about the health of the global economy.

The Dow Jones industrial average fell 3.5 percent, capping its biggest two-day drop since the height of the financial crisis in 2008. Markets in Europe and Asia fell even more. And it wasn’t just stocks. Commodities — the raw materials such as copper, oil and corn that countries use to fuel their economies — plummeted after months of holding steady.

“Investors seemed to be worried about owning anything other than canned goods,” said Adam Sieminski, chief energy economist for Deutsche Bank. “There’s a real fear out there that nothing is safe right now.”

New indications that China’s massive economy might finally be cooling off appeared to scare markets, as did the steady trickle of bad news out of Europe. After plunging more than 5 percent in afternoon trading, the Dow rebounded slightly to close down 391 points, or 3.5 percent.

At a time when job insecurity and unemployment are already high, Americans have seen the value of their 401(k)s and other retirement funds erode sharply in recent weeks during wild market swings. Since hitting its summer high of 12,681.16 on July 22, the Dow has plunged more than 1,200 points, or nearly 10 percent, in the past two months. In the past four days, the Standard & Poor’s 500-stock index has fallen 7.1 percent.

Wednesday’s extraordinary actions by the Federal Reserve to boost the economy had little impact. Investors seemed to pay more attention to the central bank’s announcement that it saw “significant downside risks to the U.S. economy” than to the news that it would purchase $400 billion in long-term Treasury securities to reduce interest rates.

The slump in commodities was perhaps the starkest illustration of the newfound crisis of confidence. Initial reports indicated that manufacturing in China, the world’s largest consumer of metals, could slip for the third month in a row. In recent months, Chinese officials have moved to tighten credit to prevent the economy from overheating.

“There’s a real uncertainty about global growth now that China’s economy finally seems to be responding to monetary tightening,” said Cameron Brandt, a global markets analyst at EPFR Global. “That great escape valve for optimists is now closing off.”

Chinese stocks closed down 4.9 percent Thursday as measured by the Shanghai composite index and were down 1.2 percent in early trading Friday. Hong Kong’s Hang Seng index fell nearly 3 percent early Friday, and Australia’s S&P/ASX 200 dropped 1.1 percent. Japanese markets were closed Friday for a national holiday.

Commodity prices dropped Thursday, reflecting reduced demand for oil, agricultural products and precious metals. An S&P index of 24 raw materials slumped more than 5 percent, wiping out the past year’s gains. Crude oil fell more than 7 percent, to about $80 a barrel, its lowest price in four weeks. Copper prices fell to a one-year low.

Market observers attributed part of the fall in raw-material prices to investors rushing into dollars. The dollar index moved to a seven-month high after the Federal Reserve announced its decision to buy up $400 billion in long-term debt. Commodities such as crude oil are priced in dollars, so as the currency rises, oil becomes more expensive for holders of other currencies.

Even gold, long a haven for investors, fell more than 3 percent Thursday as the dollar rose, setting the stage for gold’s largest monthly decline since January.

Some analysts noted that the drop in commodity prices could ultimately provide relief to companies and consumers who have been battered in recent months by the high price of raw materials. “Companies that use raw materials have all seen their profit margins squeezed,” said Donald Selkin, chief market strategist at National Securities. “In a way, this should be good for the economy,” he added, noting that lower gas prices could put more money in consumers’ pockets.

Still, the main feature of the commodities market has been extreme volatility, which has partly reflected deep uncertainty over the global economy. Earlier this year, for instance, the price of crude oil jumped to $115 a barrel during unrest in Egypt and Libya, but it has recently dropped more than $5 in 10 days. “It’s a clear sign that markets are confused, trying to figure out what the heck is going on,” said energy analyst Stephen Schork. “I wouldn’t be surprised if we continued to see big swings.”

There are still plenty of potential economic pitfalls around the globe. In Europe, fears about Greece’s debt load continue to plague the continent, although the country appears likely to receive at least a temporary reprieve from default next month. Meanwhile, new manufacturing orders in Germany declined at the fastest pace in more than two years, raising new concerns that Europe’s biggest economy — and the main contributor to any euro-zone bailouts — may be running aground.

Standard & Poor’s downgraded the credit ratings of seven Italian banks Wednesday, saying they were at risk because of loans to countries with troubled fi­nances — primarily Greece and Italy. At the same time, the European Union’s crisis monitor said threats to sovereign finances had moved from small countries to large ones in the past several months.

“Tensions have spread across capital markets around the world,” the European Systemic Risk Board said in a statement after meeting Wednesday.

Staff writer Michael Birnbaum in Berlin contributed to this report.