US stocks tumble amid concerns about Fed rates plans and economic growth
US stocks abruptly changed course again and took large losses as investors worried about the possibility of a weaker global economy and tried to anticipate the Federal Reserve's plans for interest rates.
Energy companies fell with the price of oil after a leading industry group said demand for oil is down more than it previously thought.
Stocks sank over the first few hours of trading and never regained their footing.
The price of oil fell 3% after the International Energy Agency's remarks about oil demand. The group expects weaker growth because of a more pronounced slowdown in the global economy.
Bond yields jumped and phone companies dropped. Apple was one of the few bright spots after T-Mobile said pre-orders for Apple's newest iPhones are strong.
After two months of unusual calm on the markets, stocks have see-sawed over the last few days. They plunged on Friday and recovered about half those losses on Monday, only to drop lower on Tuesday. Confusion over the Fed's intentions has been a major factor.
Randy Frederick, vice president of trading and derivatives at Charles Schwab, said investors do not know what the Fed will do at its meeting next Tuesday and Wednesday and the market may remain volatile until then.
"Some of the things they said Friday scared people," he said. "Monday they tried to calm them down. Now they're in a quiet period so we don't know what they're thinking."
The Dow Jones industrial average gave up 258.32 points, or 1.4%, to 18,066.75. The Standard & Poor's 500 index fell 32.02 points, or 1.5%, to 2,127.02. The Nasdaq composite lost 56.63 points, or 1.1%, to 5,155.26.
The IEA, which represents 29 oil-producing countries, is predicting slower growth in demand for oil because of a more pronounced economic slowdown during the third quarter of the year, among other factors. The price of oil has plunged over the last two years as an enormous supply glut built up while growth in demand slowed.
Investors have been worried about a possible slowdown in economic growth. Those fears were a big reason stocks tumbled in January and early February.
US crude fell 1.39 dollars, or 3%, to 44.90 dollars a barrel in New York. Brent crude, the benchmark for international oil prices, slid 1.22 dollars, or 2.5%, to 47.10 dollars a barrel in London.
Exxon Mobil sank 2.08 dollars, or 2.4%, to 85.21 dollars and Marathon Oil stumbled 1.13 dollars, or 7.3%, to 14.34 dollars.
Anadarko Petroleum agreed to pay two billion dollars to buy Freeport-McMoRan's deepwater assets in the Gulf of Mexico. Activist investor Carl Icahn, who bought a stake in Freeport-McMoRan last year, has pushed the company to spin off its oil and gas business so it can focus on copper mining. Anadarko stock dipped 20 cents to 57.59 dollars and Freeport-McMoRan fell 93 cents, or 8.4%, to 10.15 dollars.
Of the 30 stocks on the Dow average, only Apple traded higher. It rose 2.51 dollars, or 2.4%, to 107.95 dollars after T-Mobile said pre-orders for Apple's newest iPhones, introduced last week, are the strongest it has seen so far.
US government bond prices fell. The yield on the 10-year Treasury note rose to 1.73% from 1.67%. The yield on the 30-year Treasury bond also jumped. Both yields are the highest they have been since late June, just before Britain voted to leave the European Union.
Only 20 stocks in the S&P 500 index traded higher. Some of the largest losses went to phone companies, which sank as higher bond yields made them less appealing as income-producing investments. Verizon shed 1.12 dollars, or 2.1%, to 51.45 dollars and AT&T fell 74 cents, or 1.8%, to 39.97 dollars.
Among the few gainers was chipmaker Intersil, which agreed to be bought by Renesas of Japan. Renesas' offer values Intersil at 22.50 dollars per share, or 3.05 billion dollars. Intersil climbed 1.94 dollars, or 9.8%, to 21.70 dollars.
Weight Watchers International slumped 68 cents, or 6.6%, to 9.68 dollars after the weight loss company said chief executive James Chambers will step down at the end of the month. Weight Watchers more than doubled after the company announced an alliance with Oprah Winfrey, who bought a 10% stake and joined the company's board of directors. The stock has given up some of its gains lately.