Update (12:08 p.m.):  Looks like spooked may have been an understatement. The Dow is currently down 420 points.

Things are getting scary on Wall Street this morning. At the start of trading, the Dow Jones Industrial Average plunged 350 points and the Standard & Poor's 500-stock index lost 2.6 percent in conjunction with a massive world market sell-off. As CNN Money reports, the tremors began in Asia following the Federal Reserve's statement yesterday, which warned of a "significant" risk the U.S. economy could begin a downturn. "In Asia, the major indexes all finished more than 2% lower. Tokyo's Nikkei index dropped 2.1%. Shanghai's SE Composite Index lost 2.8%. And Hong Kong's Hang Seng index suffered a 4.9% drubbing." The New York Times reports that "investors have been unnerved by the failure of policy makers in the 17-nation euro zone to resolve the region’s debt crisis" citing a bleak economic report in Europe:

A closely watched economic report from the euro zone — the composite purchasing managers’ index — fell to 49.2 in September from 50.7 in August, according to Markit, a financial data provider. The reading, released Thursday, was below the consensus forecast of 49.8. Both the manufacturing and services indexes declined.

“The initial and follow-up reaction from the equity market is likely the realization that the Fed has little left to offer, that Washington is a mess, and their only hope is to “ride it out” over a long period of time,” said Kevin H. Giddis, the executive managing director and president for fixed-income capital markets at Morgan Keegan & Company.

“This is about to get ugly and there is very little anyone can do about it,” he added in a research note.