Just one day after the market had its best day of 2014, it had its worst day of 2014.
The Dow Jones industrial average plunged 334 points on Thursday as a decline in energy stocks and worries about the global economy sent investors fleeing out of the market. It was the biggest point drop since June 2013.
It was also the third straight day investors have been taken on a wild roller-coaster ride. On Tuesday the Dow fell 272 points, only to jump 275 points on Wednesday. While 100-plus-point moves in the Dow have become more common as stocks have risen to record highs, 200-plus-point moves had been rare until this week. More than half of this year’s 200-point moves have happened in the last two weeks.
The VIX, a measure of volatility that is sometimes called Wall Street’s “fear index,” jumped 26 percent to its highest level since February.
After more than three years of the stock market moving quietly, steadily higher, volatility is back and in a big way, market observers say. The stock market hasn’t seen day-to-day movements like this since August 2011, when Standard & Poor’s downgraded the United States’ credit rating. The S&P downgrade subsequently pushed the U.S. stock market into its last “correction,” a technical term for when stocks fall 10 percent or more from a recent peak.
The Dow lost 334.97 points, or 2 percent, to 16,659.25. The Standard & Poor’s 500 index lost 40.68 points, or 2.1 percent, to 1,928.21, and the Nasdaq composite fell 90.26 points, or 2 percent, to 4,378.34.
Few companies were spared from the selling Thursday. All 30 members of the blue-chip Dow index fell, and 482 of the 500 companies in the S&P 500 index ended the day lower.
A large part of Thursday’s selling happened in energy stocks.
The price of oil fell sharply again Thursday, continuing its multiweek decline, on concerns that global oil production remains high despite signs that global demand is slowing.
Benchmark U.S. crude fell $1.54 to $85.77 a barrel on the New York Mercantile Exchange, a third straight decline of more than 1.5 percent. Oil is now 20 percent below its 2014 peak of $107.26 a barrel, reached in late June, technically pushing oil into a bear market.
Brent crude, an international benchmark used to price oil used by many U.S. refineries, fell $1.33 to $90.05 a barrel in London, at one point slipping below $90 for the first time since June 2012.
Sinking crude prices mean lower future profits for oil and gas companies, and investors responded accordingly. The energy sector of the S&P 500 fell nearly 4 percent, far more than the rest of the market. Exxon Mobil and Chevron, the nation’s two largest oil and gas companies, each fell roughly 3 percent.
