Stocks posted sharp losses Tuesday, as health care stocks and lower oil prices weighed on the market.
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The Dow Jones Industrial Average slipped 362 points to 26,076, recovering slightly after falling as much as 411 points. The S&P 500 fell 31 points to 2,822. The Nasdaq Composite was down 64 points at 7,402.
The Dow’s 1.37% decline marked the second-largest daily retreat since President Trump’s election victory in November 2016.
Health care was the worst-performing sector in the S&P, a selloff driven by news that JPMorgan Chase (NYSE:JPM), Berkshire Hathaway (NYSE:BRKA) and Amazon.com (NASDAQ:AMZN) are teaming up to address rising medical costs for employees. Amazon shares gained 1.4%, while UnitedHealth (NYSE:UNH), Aetna (NYSE:AET) and other insurers closed in negative territory.
Energy stocks fell amid a 1.6% drop in U.S. oil futures, which settled at $64.50 a barrel. Exxon Mobil (NYSE:XOM), the world’s largest publicly traded oil company, fell 1.4%. Chevron (NYSE:CVX) was down 2.5%.
The benchmark 10-year Treasury yield, which hit a nearly four-year high Monday, continued to climb as the Federal Reserve began its two-day policy meeting. Traders are watching for clues about the central bank’s timeline for interest rate hikes.
Markets have been “overheated” in January, and stocks remain on pace to record one of the strongest starts to a year in decades even after Tuesday’s pullback, according to Chris Zaccarelli, chief investment officer for Independent Advisor Alliance in Charlotte, North Carolina. Citing strength in the U.S. economy and robust corporate profits, Zaccarelli said “none of the warning signals are there” to change his assessment that “we are still on track to have a good year in the equity markets, despite the recent turbulence we are seeing.”
The market selloff came on the heels of President Trump’s first State of the Union address Tuesday evening. Trump is expected to focus on trade and the economy, among other themes.