U.S. stocks tumbled, with the Dow Jones Industrial Average plunging more than 370 points and small caps entering a bear market, as oil’s failure to maintain a 4 percent rally rekindled a flight from risk assets. Treasuries surged amid signs that demand for the relative safety of bonds is rising.
The Standard & Poor’s 500 Index fell past 1,900, a level it’s closed below only five times in the past 14 months. The Nasdaq 100 Index had its worst day since Aug. 24, as selling was heaviest in technology and consumer shares. The Russell 2000 Index capped a 22 percent slide from its June record. Brent crude dipped below $30 for the first time since 2004. The yield on the 10-year Treasury note fell to 2.04 percent, after an auction of $21 billion of 10-year notes was deemed ‘outstanding.’ Gold traded above $1,090 an ounce.
The S&P 500 sank 2.5 percent at 4 p.m. in New York, the lowest level since Sept. 29. Shares in consumer discretionary shares plunged 3.4 percent with losses heaviest in Amazon.com Inc. and Netflix Inc. Health-care shares sank 2.9 percent, while financial services stocks in the S&P 500 fell to the lowest level since May 2014.
The SPDR Barclays High-Yield Bond exchange-traded fund lost 1.3 percent for its biggest slide since Dec. 11, and is now at the lowest level since May 2009. Selling in junk-rated equities intensified as the continued rout in commodities threatens the solvency of some highly leveraged resource producers.
Damage was heaviest among small-cap shares, with the Russell 2000 plunging to 2 1/2 year low. The gauge is down 22 percent from its June record, meeting the common definition of a bear market.
According to JPMorgan Chase & Co., this year’s tumble is at least partly attributable to robotic selling by quantitative investors who were forced to rebalance their funds when stocks and bonds both fell in January.
The Chicago Board Options Exchange Volatility Index climbed 11 percent to 24.93, after posting its first back-to-back weekly gains since July to start the year.