The Dow Jones industrial average plummeted 610 points, or about 3.4%, on Friday as global stock, currency and other markets convulsed in response to Britain's surprising vote to leave the European Union.
The so-called Brexit shouldn't lead to a recession in the U.S., experts said.
Still, the turmoil caused by the referendum wasn't good news for the struggling U.S. economy. It marked another in a seemingly unending series of foreign and domestic crises in recent years that have slowed the recovery from the Great Recession.
Plunging stocks certainly won't bolster the confidence of U.S. consumers, whose spending accounts for about two-thirds of U.S. economic activity. The Nasdaq index, which is heavy on technology stocks, fell by more than 4%.
The U.S. market drop followed a fall of nearly 8% in Japan and somewhat smaller but widespread losses across Europe.
The rush to "safe haven" assets sent the futures price of gold soaring the most since 2008, up nearly 5% to $1,322 an ounce. The yield for 10-year U.S. Treasury bonds -- which move in the opposite direction as price -- fell to 1.57% and at one point neared the all-time low of 1.38% reached in 2012.
The value of the dollar soared against the British pound and rose against several other major currencies. And though that makes a summer vacation in London much less expensive, it also hurts exports by driving up the cost of U.S. goods abroad.
At the same time, already cautious Federal Reserve policymakers now are unlikely to raise a key interest rate next month -- or maybe even for the rest of the year -- denying savers a better return on their bank accounts and withholding monetary policy validation of a strengthening economy.
But even as world leaders were on high alert Friday for the fallout from the Brexit vote, analysts preached patience and perspective on this side of the Atlantic.
"Obviously there's a lot of uncertainty and there's nothing good that comes out of it," said Mark Zandi, chief economist at Moody's Analytics. "But this isn't something that's going to shake the foundation of the U.S. economy."
Britain is the seventh-largest U.S. trading partner, but accounts for only about 3.1% of total U.S. trade so far this year. Canada, Mexico and China each account for about 15% of U:S. trade.
And though the stock market declines were steep -- Friday marked the eighth-greatest point drop for the Dow -- they paled in comparison to past crashes. The Dow would have had to fall nearly 4,000 points -- or 22% -- to equal the Black Monday selloff of 1987.
"Many investors are worried about the next big one, the next major global recession and 50% decline in the market like we saw in '08 and '09, and I don't think this is it," said Jeff Kleintop, chief global investment strategist at Charles Schwab. "I think this is more akin to some of the shocks we've seen over the past five years."
Kleintop cautioned long-term investors to ride out what he expected would be a short-term selloff. He noted that the steep market downturn at the beginning of the year, triggered by concerns about the Chinese economy, ended after several weeks and the markets rebounded.
The Federal Reserve said it was "carefully monitoring developments in global financial markets" and was prepared to provide dollars to other foreign central banks to increase liquidity. The Fed said pressures in global markets "could have adverse implications for the U.S. economy."
But asked at a Senate hearing this week if she thought a British decision to leave the EU would push the U.S. into recession, Fed Chairwoman Janet L. Yellen said, “I don't think that's the most likely case, but we just don't really know what will happen, and we'll have to watch very carefully.”
Concerned about global headwinds, including the lingering uncertainty in China, Yellen and her Fed colleagues held their key short-term interest rate steady last week partly because they wanted to see how the British vote turned out.
Odds already were low that Fed policymakers would raise the rate next month. Now, the Brexit vote has taken a rate hike off the table, said Sung Won Sohn, an economist at Cal State Channel Islands
On Friday, a closely watched barometer by the CME Group futures exchange put the odds at zero of a small increase at the Fed’s meeting in late July. The odds had been about 12% on Thursday.
Treasury Secretary Jacob J. Lew said he also was watching the situation and was consulting closely with British and EU officials.
He and other finance ministers and central bank governors from the Group of Seven industrial nations, which include the U.S. and Britain, said Friday they were ready to take steps to stabilize markets because they "recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability."
Investors actually think there's a better chance – 4.8% -- that the Fed would trim the rate back down to almost zero, from its current range between 0.25% and 0.5%. Sohn agreed.
"The U.S. central bank might have to cut the interest rate back to zero if economic and financial conditions worsen beyond expectations," he said.
The Brexit vote is expected to reduce economic growth in Britain and the European Union. On that assumption, the Moody's credit service took a step toward cutting the UK's credit rating, which could increase its costs of borrowing.
But the impact of that on the U.S. economy should be limited, Zandi said.¿¿¿¿¿¿ He projected total U.S. economic output over the next year would be reduced by about 0.10 percentage point. Annual U.S. growth is about 2%.
1:06 p.m.: This article has been updated with figures from the close of U.S. markets.
7:38 a.m.: This article has been updated with early trading figures for major stock indexes.