Another day of big losses knocked U.S. stocks to their lowest levels in more than a year Monday. Investors dumped high-growth technology and retail companies as well as steadier, high-dividend companies. Oil fell below $50 a barrel for the first time since October 2017.
Hospitals and health insurers slumped after a federal judge in Texas ruled that the 2010 Affordable Care Act is unconstitutional. Other stocks wobbled in morning trading, then plunged in the afternoon. The Dow Jones Industrial Average fell 507 points after a 496 point drop Friday.
Amazon led a rout among retailers, and tech companies including Microsoft turned sharply lower. Some of the largest losses went to utilities and real estate companies, which have done better than the rest of the market during the turbulence of the last three months.
"That is basically retail investors panicking," said Mark Hackett, chief of investment research at Nationwide Investment Management. "Investors basically are confusing the idea of a slowdown with a recession."
But investors dumped almost everything. Less than 40 of the 500 stocks comprising the S&P 500 finished the day higher.
The S&P 500 index, the benchmark for many investors and funds, finished at its lowest level since Oct. 9, 2017. It has fallen 13.1 percent since its last record close on Sept. 20. The Russell 2000, an index of smaller companies, has dropped more than 20 percent since the end of August, meaning that index is now in what Wall Street calls a "bear market."
Smaller U.S. stocks have taken dramatic losses as investors have lost confidence in the U.S. economy's growth prospects. Smaller companies are considered more vulnerable in a downturn than larger companies because they are more dependent on economic growth and tend to have higher levels of debt.
Hackett said the current drop is similar to the market's big plunge in late 2015 and early 2016, which was also tied to fears that the global economy was weakening in a hurry. But even though the economy is slowing down after its surge in 2017 and 2018, it should continue to do fairly well.
"It's a slowdown from extremely high levels to healthy levels," he said. "The globe isn't going into a recession."
The S&P 500 skidded 2.1 percent, to 2,545.94. The Dow Jones Industrial Average lost 507.53 points, or 2.1 percent, to 23,592.98. The Nasdaq composite fell 2.3 percent, to 6,753.73. The Russell 2000 index dipped 2.3 percent, to 1,378.14.
Following the health care ruling, hospital operator HCA dropped 2.8 percent to $123.1 and health insurer UnitedHealth lost 2.6 percent to $258.07. Centene, a health insurer that focuses on Medicaid and the Affordable Care Act's individual health insurance exchanges, fell 4.8 percent to $121.42 and Molina skidded 8.9 percent to $120.
Many experts expect the ruling will be overturned, but with the markets suffering steep declines in recent months, investors didn't appear willing to wait and see.