NEW YORK -- Another day of big losses knocked U.S. stocks to their lowest levels in more than a year Monday as the volatility of recent weeks resumed ahead of the holidays.
The Dow Jones industrial average lost 507.53 points, or 2.1 percent, to 23,592.98, extending a slide after a 496-point loss Friday. The blue-chip barometer is notching its worst month in more than three years.
The S&P 500 skidded 54.01 points, or 2.1 percent, to 2,545.94. The Nasdaq composite fell 156.93 points, or 2.3 percent, to 6,753.73. The Russell 2000 index dipped 32.97 points, or 2.3 percent, to 1,378.14.
Investors dumped shares of high-growth technology and retail companies as well as steadier, high-dividend companies. Oil fell below $50 a barrel for the first time since October 2017.
Hospitals and health insurers slumped after a federal judge in Texas ruled that the 2010 Patient Protection and Affordable Care Act is unconstitutional. Other stocks wobbled in morning trading, then plunged in the afternoon.
Amazon led a rout among retailers, and tech companies, including Microsoft, turned sharply lower. Some of the largest losses went to utilities and real estate companies, which have done better than the rest of the market during the turbulence of the past three months.
"That is basically retail investors panicking," said Mark Hackett, chief of investment research at Nationwide Investment Management. "Investors basically are confusing the idea of a slowdown with a recession."
But investors dumped almost everything. Fewer than 40 of the 500 stocks comprising the S&P 500 finished the day higher.
"Every part of the market has been acting like things are a lot slower," said Ilya Feygin, managing director at institutional brokerage firm WallachBeth. "Everywhere, every market is telling you the same thing."
This year's sell-off is nothing like the collapse of stocks a decade ago, when the S&P 500 fell more than 38 percent. But in its own way, 2018 is emerging as a significant year for financial markets, with almost every type of investment and asset class -- stocks, bonds, commodities, even supersafe Treasurys -- posting negative or minuscule returns.
The S&P 500 index, the benchmark for many investors and funds, finished Monday at its lowest level since Oct. 9, 2017. It has fallen 13.1 percent since its last record close on Sept. 20. The Russell 2000, an index of smaller companies, has dropped more than 20 percent since the end of August, meaning that index is now in what Wall Street calls a "bear market."
Smaller U.S. stocks have taken dramatic losses as investors have lost confidence in the U.S. economy's growth prospects. Smaller companies are considered more vulnerable in a downturn than larger companies because they are more dependent on economic growth and tend to have higher levels of debt.
Hackett said the current drop is similar to the market's big plunge in late 2015 and early 2016, which was also tied to fears that the global economy was weakening in a hurry. But even though the economy is slowing down after its surge in 2017 and 2018, it should continue to do fairly well.
"It's a slowdown from extremely high levels to healthy levels," he said. "The globe isn't going into a recession."
Markets generally languish for a couple of weeks after Thanksgiving as traders sell investments and losers in preparation for the tax season.
Toward the end of December, some stocks may be on sale, causing investors to scoop them up and push indexes higher.
The Federal Reserve is expected to raise interest rates again Wednesday, the fourth increase of this year. It's been raising rates over the past three years, and investors will want to know if the Fed is scaling back its plans for further increases based on the turmoil in the stock market over the past few months and mounting evidence that world economic growth is slowing down.
Hackett, of Nationwide, said investors will be happy if the Fed adjusts its plans and projects fewer increases in interest rates next year. But he said investors might be startled if the Fed doesn't raise rates this week, as has been widely expected.
Ed Yardeni, president of Yardeni Research, said there is still time for a late-December, Santa Claus Rally.
"If [Fed Chairman Jerome] Powell puts on a Santa suit on Wednesday and tries to calm everybody down, we could have a rally," Yardeni said. "He precipitated this sell-off in early October when he said we were a long way from the 'neutral' federal funds rate. Now he needs to calm everybody down and say we're going to stop for a while and see how the economy absorbs it all. It wouldn't be hard to have a rally, given how far we have gone down since late September."
White House economic adviser Peter Navarro said on CNBC on Monday morning that the Fed is the source of volatility and the stock slide.
"The economy is growing without inflation," said Navarro, calling on the Fed not to raise interest rates.
In addition to Navarro, several Wall Street figures have criticized the Fed in the past day, urging the central bank to not raise interest rates when it meets Wednesday.
"I think they shouldn't raise them this week," said Jeffrey Gundlach in an interview Monday with CNBC. Gundlach, chief investment officer of DoubleLine Capital, said "the bond market is basically saying, 'Fed, you've got no way you should be raising interest rates.'"
After Friday's health care ruling, shares of hospital operator HCA dropped 2.8 percent to $123.1 and health insurer UnitedHealth fell 2.6 percent to $258.07. Centene, a health insurer that focuses on Medicaid and the Affordable Care Act's individual health insurance exchanges, fell 4.8 percent to $121.42, and Molina skidded 8.9 percent to $120.
Many experts expect the court ruling will be overturned, but with the markets suffering steep declines in recent months, investors didn't appear willing to wait and see.
Benchmark U.S. crude fell 2.6 percent to $49.88 a barrel in New York. Brent crude, used to price international oils, dipped 1.1 percent to $59.61 a barrel in London. Weaker economic growth would mean less demand for oil, and traders have been concerned there is too much crude supply on the market. That's chopped oil prices by one-third since early October.
The slide in oil prices started Monday after data provider Genscape Inc. was said to report higher inventories at the biggest American storage hub in Oklahoma. The drop intensified as the U.S. Energy Department forecast higher output for this month and next in the country's top shale plays.
Oil prices are on track for a third-straight monthly decline despite efforts by the Organization of the Petroleum Exporting Countries, Russia and other major exporters to halt the slide. Crude had neared $50 in recent weeks but always rebounded. Crossing the threshold was "significant," said Michael Loewen, a commodities strategist at Scotiabank in Toronto.
"We're probably going to see a supply slowdown in the U.S.," he said by telephone. "I do think that producers will react."
Bond prices rose. The yield on the 10-year Treasury note fell to 2.86 percent from 2.89 percent.
Gold rose 0.8 percent to $1,251.80 an ounce. Silver added 0.8 percent to $14.76 an ounce. Copper dipped 0.3 percent to $2.75 a pound.
Information for this article was contributed by Marley Jay of The Associated Press; by Thomas Heath of The Washington Post; by Alex Nussbaum of Bloomberg News; and by Carlos Tejada and Matt Phillips of The New York Times.
A Section on 12/18/2018