U.S. stocks declined sharply on Tuesday as a selloff in global equity markets and a slide in oil and other commodity prices hit sentiment.
More negative news from China may also be adding to fears about slowing global economic growth that have been heightened after the Federal Reserve last week chose to stay pat on interest rates.
The S&P 500 index slid 25 points, or 1.3%, to 1,941 with all 10 main sectors trading lower. Materials and technology stocks were leading losses.
The Dow Jones Industrial Average dropped 190 points, or 1.2%, to 16,283, as all of the blue-chip companies on the index traded lower. United Technologies Corp. and Goldman Sachs Group led the decliners.
The Nasdaq Composite lost 67 points, or 1.4%, at 4,761. Biotechnology stocks that were battered on Monday declined further.
Implied volatility on the S&P 500 as measured by the CBOE Volatility index jumped 11% to above 22. The index has been at elevated levels for the past four weeks.
U.S. equities followed the lead of European stocks which fell sharply, with miners and car makers helping to lead the way lower. Crude-oil futures were down nearly 3%, hitting energy and materials stocks.
Chinese President Xi Jinping said in a written interview with The Wall Street Journal that the government is preparing a full slate of economic reforms. But some investors aren’t soothed.
The Asian Development Bank Tuesday lowered its forecast for China’s annual economic growth this year to 6.8% as pressures on the economy increased, from a previous forecast of 7.2%.
The Fed has been viewed as hurting stocks by citing worries about the global economy in its decision last week not to raise interest rates.
“The Fed’s decision not to hike last week did not get the positive reaction in the markets that we may ordinarily have expected, which suggests that aside from being priced in, there may now be a willingness for the Fed to just get it out of the way,” said Craig Erlam, senior market analyst at Oanda, in a note Tuesday.
Erlam emphasized it is a “quieter week” for economic data, but there are a lot of central bankers speaking. Atlanta Fed President Dennis Lockhart is due to make remarks at 6 p.m. Eastern Time in Alabama after saying Monday that he’s “confident” there will be a rate increase this year. He is a voting member of the Fed’s policy-making group.