No rest for investors: Dow plunges 520 (ext.)

NEW YORK (CNNMoney) -- After a one-day respite, U.S. stocks plunged sharply yet again Wednesday as investors were confronted with mounting fears about Europe's ongoing debt crisis, this time in France.

The Dow Jones industrial average (INDU) lost 520 points, or 4.6%, to 10,720. The index ended the day near session lows.

The S&P 500 (SPX) fell 52 points, or 4.4%, to 1,121; and the Nasdaq composite (COMP) lost 101 points, or 4.1%, to 2,381.

Stocks were led lower by the financial sector. On Wednesday afternoon CEO of embattled Bank of America (BAC, Fortune 500) Brian Moynihan tried to reassure investors that conditions at the bank and in the country are much better than they were four years ago when the financial crisis hit. The comments were made during a call hosted by investor Bruce Berkowitz of Fairholme Capital Management.

But the comments were not enough. Shares of the Dow component plunged 11% on the day. BofA has fallen nearly 50% so far this year.

Along with BofA's problems, investors remain worried about the Europe's ongoing sovereign debt crisis.

Ever since Standard & Poor's stripped the U.S. of its AAA credit rating on Friday, fears have been building that rating agencies may also downgrade AAA-rated nations in Europe, since they are also struggling with massive debt problems.

Even though the major rating agencies have reiterated France's AAA rating, "there's growing concern that France could get downgraded," said Tom Schrader, managing director at Stifel Nicolaus. "There's fear that S&P might do something stupid."

So far this month, all three indexes are down more than 10% and are on track to post the worst losses since October 2008.

Yo-yo action in the markets tends to spoil confidence among investors, and in turn, that lack of faith fuels additional volatility.

Ahead of the opening bell Wednesday, the New York Stock Exchange invoked Rule 48, which gives the exchange the right to pause trading in the event of extreme volatility. The NYSE typically invokes the rule several times each year.

The dollar gained 1% against the euro and the British pound, but was lower versus the Japanese yen.

Oil for September delivery rose $3.50 to $82.80 a barrel.

Gold futures for December delivery gained $45.30 to settle at $1,788.30 an ounce. Earlier, gold futures hit an intraday high of $1,801 per ounce.