Stocks plunged on Thursday amid increasing credit market woes, disappointing earnings, surging oil prices, and grim news for the housing sector.

The Dow took its biggest intraday dive this year when it fell nearly 450 points before recovering a bit to end the day down 311.50 points, or 2.26 percent, at 13,473.57. It was the Dow's biggest one-day point drop since Feb. 27, when it plunged 416 points.

Other major indices didn't fare much better. The Standard & Poor's 500 was off 35.40, or 2.33 percent, to 1,482.69. The Nasdaq Composite Index shed 48.83, or 1.83 percent, to close the day at 2,599.34.

The bond market welcomed fearful equity investors and soaring Treasury prices sent the yield on the 10-year note down to 4.79 percent from 4.90 percent. 

Investors have become increasingly uneasy about the mortgage and lending markets this week. On Wednesday, a group of banks had to postpone a $12 billion offering to raise funds for Cerberus Capital's acquisition of Chrysler, because they had failed to find buyers; the bankers underwriting Kohlberg, Kravis, and Roberts' purchase of Alliance Boots found themselves in a similar situation.

Wall Street is concerned that a lack of funding will slow the wave of acquisitions.

Meanwhile, a oil prices climbed briefly over $77 a barrel on Thursday, the highest level in nearly a year.

Homebuilders D.R. Horton and Beazer Homes reported third-quarter losses of $2.62 and $3.20 respectively, causing those stocks to slip.

Sour news for June new home sales didn't help any. The Commerce Department reported that sales of new homes fell a much larger than expected 6.6 percent last month to an annual rate of 834,000 units, the largest percentage drop since January.

Exxon Mobil, the world's biggest company by market value, declined after it said second- quarter earnings fell 1 percent due to production and crude price declines.

In deal news, shares of Kraft fell after Warren Buffett's Berkshire Hathaway announced it has acquired a stake in the company.