Just when Washington thought the U.S. economy was back on track after dodging a bullet from the now-resolved debt crisis, Wall Street sent a clear signal Thursday that all is not well.

The Dow Jones industrial average fell off a cliff, dropping more than 500 points Thursday, erasing its gains for the year as investors gave President Obama a present on his 50th birthday that he'd rather return.

Stocks plunged amid worries over new data showing economic weakness in the U.S. and Europe. Investors were spooked by reports showing the number of Americans applying for first-time jobless benefits fell to 400,000 from a revised 401,000 in the prior week.