U.S. stocks closed lower after a shortened session Friday, bumping the benchmark S&P 500 index into a correction, or drop of 10 percent below its most recent all-time high in September.
Energy companies led the market slide as the price of U.S. crude oil tumbled to its lowest level in more than a year, reflecting worries among traders that a slowing global economy could hurt demand for oil.
“Oil is really falling sharply, continuing its downward descent, and that appears to be giving investors a lot of concern that there’s slowing global growth,” said Jeff Kravetz, regional investment director at U.S. Bank Private Wealth Management. “You have that, and then you have the recent sell-off in tech and in retail, and then throw on there trade tensions and rising rates.”
Losses in technology and internet companies and banks outweighed gains in health care and household goods stocks. Several big retailers declined as investors monitored Black Friday for signs of a strong holiday shopping season.
Trading volume was lighter than usual with the markets open for only a half day after the Thanksgiving holiday.
The S&P 500 index fell 17.37 points, or 0.7 percent, to 2,632.56. The index is now down 10.2 percent from its last all-time high set Sept. 20. The last time the index entered a correction was in February.
The latest correction comes as investors worry that corporate profits, a key driver of stock market gains, could weaken next year. “The market is re-pricing and trying to assess where we’re going to be in the early part of 2019,” said Quincy Krosby, chief market strategist at Prudential Financial.
The Dow Jones industrials average lost 178.74 points, or 0.7 percent, to 24,285.95. The Nasdaq composite dropped 0.5 percent, to 6,938.98, while the Russell 2000 index of smaller-company stocks picked up 0.40 points, or 0.03 percent, to 1,488.68.
Crude oil prices fell for the seventh straight week on worries that a slowing global economy could hurt demand even as oil production has been increasing. The benchmark U.S. crude contract slid 7.7 percent to settle at $50.42 per barrel in New York. That is the lowest since October 2017. Brent crude, the international standard, lost 6.1 percent to close at $58.80 per barrel in London.
Saudi Arabia and other OPEC members have recently signaled a willingness to consider production cuts at the oil cartel’s meeting next month. The U.S. has been increasing pressure on Saudi Arabia and OPEC to not cut production, however, a move which could push prices down further.
The slide in oil prices weighed on energy stocks. Concho Resources, a developer and explorer of oil and natural gas properties, slumped 6.3 percent to $126.96.
Tesla fell 3.7 percent to $325.83 after the electric auto maker said it intends to cut prices for its Model X and Model S cars in China to make them more affordable.