Never before has Wall Street gotten off to a worse start to a year.
The stock market capped the first two weeks of 2016 with a steep slide Friday that sent the Dow Jones industrial average down nearly 400 points.
All three major stock indexes — the Dow, the Nasdaq composite and the Standard & Poor’s 500 — are now in what’s known as a correction, or a drop of 10 percent or more from their recent peaks.
The market has been on a stomach-churning ride since the start of the year, wrenched up — but mostly down — because of alarm over a slowdown in China and the plunging price of oil to its lowest level in 12 years. Investors are already seeing damage to U.S. corporate profits, particularly at energy companies.
The Dow slid 390.97 points, or 2.4 percent, to 15,988.08. The average had been down more than 500 points early in the afternoon. The S&P 500 ended down 41.51 points, or 2.2 percent, at 1,880.33. The Nasdaq dropped 126.59 points, or 2.7 percent, to 4,488.42.
The Dow and S&P 500 have now fallen about 8 percent this year, while the Nasdaq is off about 10 percent.
“Oil is the root cause of today,” said Dan Farley, regional investment strategist at the Private Client Reserve at U.S. Bank. “People are uncertain, and when they’re uncertain they’re scared.”
Crude oil has dropped below $30 a barrel from a high of over $100 during the summer of 2014, eviscerating energy company profits.
Many investors had welcomed the new year with fairly high hopes. They expected oil prices would stabilize. After a market correction in August, few forecast it would happen again so soon. And the Federal Reserve’s move in December to raise interest rates for the first time in nearly 10 years signaled to many that the U.S. economy was healthy.
Despite the rough start to the year, Wall Street watchers are not ready to say the bull market is over.
“We don’t believe we’re going into a bear market,” said David Chalupnik, head of equities at Nuveen Asset Management. “The reason for that is the U.S. economy is sound.”