(Bloomberg) -- U.S. stocks plunged the most in 10 months, joining a selloff in global risk assets on speculation that the U.K. decision to leave the European Union will hamper worldwide growth.

Equities sank to session lows in afternoon trading, with the Dow Jones sliding more than 600 points. The S&P 500 extended losses after falling below the 2,050 level, an area where other pullbacks during the prior two months found a floor. Banks and industrial shares capped their worst single-day declines in more than four years.

"Market participants are right to be concerned," said Dean Maki, chief economist of investment firm Point72 Asset Management. "This is a legitimate risk-off event. We're likely to see weaker growth as a result of this, and it's appropriate that markets are reacting to this. Exports are likely to be weaker and earnings are a function of exports. U.S. exporters are going to have to deal with a stronger dollar again."

The S&P 500 fell 3.6% to 2,037.35 at 4 p.m. in New York, the most since August 24. The benchmark erased its gain for the year, which reached as much as 3.7% earlier this month. The Nasdaq Composite Index tumbled 4.1%, the most in almost five years.

(Image: Bloomberg News)
(Image: Bloomberg News)

The victory of the "Leave" campaign stunned many investors who'd put wagers on riskier assets over the past week as bookmakers' odds suggested the chance of a so-called Brexit was less than one in four. The pound plunged the most in 30 years and European equities dropped as investors weighed the implications for the global economy.

The day's turbulence was accompanied by a chorus of central-bank assurances that policy makers stand ready to intervene. Governor Mark Carney said the Bank of England could pump billions of pounds into the financial system, while the European Central Bank said it will give banks all the funding they require to counter market turmoil. The Federal Reserve said it was "carefully monitoring" financial markets.

As if results of the U.K. vote wasn't enough, today is also the date of the annual rebalancing of FTSE Russell's stock indexes, a procedure that reliably exacerbates trading. In 2015, the reconstitution helped fuel a jump in volume to more than 10 billion shares, the seventh-highest total of the year.

Overnight, stock futures on the benchmark fell far enough to reach trading curbs that blocked further losses. Declines Friday also came after markets had rallied during the past week on optimism the U.K. would vote to remain in the EU, with the S&P 500 rising 1.7% in four sessions.

"Market participants are right to be concerned," said Dean Maki, chief economist of investment firm Point72 Asset Management.

Banks Battered
Banks plunged after rallying the most in five weeks Thursday, with Citigroup down the most in four years. JPMorgan Chase and Goldman Sachs lost more than 6.7%. Caterpillar and Boeing sank at least 5.1% after pacing the Dow's biggest gain in three months Thursday. Energy shares fell 3.2% as crude decreased more than 4%.

"Fundamentally, this probably doesn't impact many U.S. companies that aren't invested in the U.K., though it impacts sectors like financials because it looks like there won't be a Fed rate hike for a little bit longer, though even they don't really know," said Tim Ghriskey, who oversees $1.5 billion as managing director and chief investment officer at Solaris Asset Management.

Traders abandoned bets on future interest-rate increases well into 2017, after expectations for higher borrowing costs this year had crept up yesterday on optimism the U.K. would remain in the EU. Odds of a Fed move by February plunged to 17% from 52% Thursday, while probability of an actual rate cut before the December meeting rose to 13%.

The vote comes at a time when uncertainty already plagues U.S. stocks, with questions around the Fed's ability to stoke growth after the worst month for hiring since 2010, a four-quarter decline in corporate profits, price-earnings ratios that are close to a decade high and a presidential election looming in the fall.

The S&P 500 plunged 11% in its worst-ever start to a year before recovering through April. It's virtually been stuck in place since, struggling to hold above the 2,100 level that has capped three rallies since November. It fell from that perch again after closing above it Thursday for the first time in two weeks.

Fallout from the U.K.'s secession vote leaves global investors as reliant on their hedges as any time since the selloff that rocked markets in January and February. Trading of options and derivatives over the last week has risen in instruments that gain in times of market turbulence, among them futures on the CBOE Volatility Index. The measure of turmoil known as the VIX jumped 40% Friday, the most since August.