U.S. stocks suffered their biggest one-day slide in nearly seven weeks on Monday as a withering selloff among energy companies, which closely tracked oil's continued price slide, dragged down key benchmark indexes.
Downbeat economic reports form China, Japan and Europe also dented sentiment. Nervousness among investors was evident from a jump in 10-year Treasury yields, rising five basis points and a 17% jump in the CBOE Vix index, commonly knows as Wall Street's fear gauge.
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S&P 500 (SPX) closed 15 points, or 0.75, at 2,060.31. Losses were led by energy companies, as the sector dropped 3.9%. Materials, industrials and technology sector stocks also sold off, while defensive sectors such as utilities and health care drew buyers.
The Dow Jones Industrial Average (DJI) dropped as much as 150 points at session lows, but ended down 106.31 points, or 0.6% lower, at 17,852.48. McDonald's (NYSE:MCD) took a bite out of the blue-chip stock index following disappointing sales. Oil giants ExxonMobil (NYSE:XOM) and Chevron Corp (NYSE:CVX) also weighed on the index, dropping 2.3% and 3.7% respectively.
The tech-heavy Nasdaq Composite (RIXF) ended the day with a loss of 40 points, or 0.8%, at 4,740.69. The heaviest-weighted component of the index, Apple (NASDAQ:AAPL) fell 2.3%.
The broader market moves are playing out amid the back drop of crude oil's continued slide. Crude oil (CLF5) endured a bruising day of its own, falling more than 4% on Monday and hitting a new five-year low on continued concerns about oversupply.
Espousing a more sanguine outlook about the day's trading, Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research, down played Monday's slump, pointing out that increased buying in late afternoon session after a selloff in the morning usually indicates a short-term bullish view of institutional investors.
"The move on the S&P 500 is still less than 1% and selling on Wall Street seems to be strictly contained to industries with close ties to oil prices. While it is true that the energy companies are hit hard today, lower oil prices ultimately benefit consumers and other business that use oil, which are a much bigger part of the S&P 500," Frederick said.
Brian Fenske, head of sales trading at Investment Technology Group, brokerage and technology firm, struck a similar chord, saying a lack of clarity about crude oil prices were dictating trading strategy on Monday.
"There is a lot of uncertainty when it comes to crude oil prices, which made the whole energy sector difficult to invest in, which is why we are seeing so much selling in those companies," Fenske said.
Before Monday's retreat, the Dow was flirting with hitting the psychological benchmark of 18,000.
Concerns about the health of the global economy resurfaced on Monday after disappointing Chinese trade numbers and data showing Japan's economy contracted more than initially forecast in the third quarter. Figures from Germany showed industrial production expanded less than expected in October.
The euro (EURUSD) traded around a 28-month low after Ewald Nowotny, member of the European Central Bank's Governing Council, said the currency union is the weak spot in the world economy. European stock markets were also mostly lower.
Energy stocks sell off: Highlighting the broad selloff in energy, the Energy Select Sector SPDR Fund ETF (XLE) fell 4%. More specifically, Denbury Resources Inc. (DNR) slid 10%, making it the worst performer on the S&P 500. Newfield Exploration Co (NFX) dropped 8.5%, EQT Corp. (EQT) slid 7.6%.
Utilities stocks were in demand, with the overall sector rising 0.7%. Ameren Corp (AEE) rose 2.5% while PG&E Corp (PCG) added 1.9%.
Biotech stocks were one of the bright spots on Wall Street. Shares of Celgene Corp (CELG) jumped 3.6% on news that the biotech company extended its partnership with Agios to work on a cancer drug.
In mergers, Cubist Pharmaceuticals Inc.(CBST) soared 35% after drug giant Merck & Co. Inc. (MRK) agreed to buy the smaller antibiotics maker for $8.4 billion. Merck shares closed 0.6% higher.
Other markets: Asian markets got their first chance to react to the solid U.S. jobs report issued Friday, sending indexes in Japan and China higher. China's Shanghai Composite closed above 3,000 for the first time since 2011.
In metals, gold prices rose 1.2% while the dollar (DXY) slipped against the yen after the data showed the Japan's GDP shrank more than previously estimated.