U.S. stocks sank again on Wednesday and cemented February as the worst month for the market in two years.
Not only was the month's loss sharp, at 3.9% for the Standard & Poor's 500 index, but it was also the first in a long time. S&P 500 index funds snapped a record-setting run where they had made money for 15 straight months, including dividends.
Some of Wednesday's drop was due to a slide in the price of oil, which sent energy stocks to the market's sharpest losses. The S&P 500 fell 30.45 points, or 1.1%, to 2,713.83, while the Dow Jones industrial average lost 380.83, or 1.5%, to 25,029.20 and the Nasdaq composite dropped 57.35, or 0.8%, to 7,273.01.
The dominant fear for the month was the threat of higher inflation and interest rates. Concerns got so high that the S&P 500 spiraled down 10% in just nine days at one point, before trimming some of its losses. The index had five losses of 1% or more in February, more than it did in all of last year.
Expect even more swings in coming weeks and months, said Brian Peery, portfolio manager at Hennessy Funds. Investors are trying to figure out how many times the Federal Reserve will raise interest rates this year in the face of a growing economy. Uncertainty is high given that markets are waiting to see how much Washington's recently passed tax cuts will push companies to spend on equipment and wages.
"We were without volatility for so long, but what's in motion tends to stay in motion," Peery said. "It's been a pretty tumultuous month."
The tumult started just as the month began, when a government report showed a jump in workers' wages that surprised economists. That triggered worries that higher inflation may be on the way and that the Federal Reserve would need to get more aggressive about raising rates as a result. Higher rates make bonds more attractive as investments and can divert buyers away from stocks.
The dizzying result marked a sharp turnaround from the market's blistering start to the year, when stocks jumped on expectations that corporate profits would keep rising and the global economy would keep strengthening. It was a continuation of the remarkably smooth rise that investors enjoyed in 2017.
On Wednesday, the yield on the 10-year Treasury fell to 2.86% from 2.90% late Tuesday.
The benchmark yield relinquished roughly all of its increase from the prior day, when comments from Fed Chairman Jerome Powell once again raised speculation of a more aggressive Fed. He told Congress that he's more optimistic about the economy, which led some investors to anticipate four rate increases for 2018, up from three last year.
Among the biggest losers on Wednesday in the S&P 500 was Lowe's, which reported weaker profit for the last quarter than analysts expected. The home-improvement retailer's stock dropped $6.20, or 6.5%, to $89.59.
Energy stocks in the S&P 500 lost 2.3%, the steepest drop among the 11 sectors that make up the index. They were hurt by a sharp decline in the price of oil after a government report showed that U.S. oil inventories rose more than analysts expected last week.
Benchmark U.S. crude lost $1.37 to settle at $61.64 per barrel. Brent crude, the international standard, fell 85 cents to $65.78 per barrel.
On the winning side was Booking Holdings, the company formerly known as Priceline. It jumped $129.03, or 6.8%, to $2,034.04 after it reported a bigger profit for the latest quarter than analysts expected, aided by stronger travel bookings.
Overseas stock markets were subdued. In Europe, France's CAC 40 fell 0.4%, and Germany's DAX lost 0.4%. The FTSE 100 in London was down 0.7%.
In Asia, Japan's Nikkei 225 tumbled 1.4%, South Korea's Kospi lost 1.2% and the Hang Seng in Hong Kong lost 1.4%.
The dollar dipped to 106.66 Japanese yen from 107.42 yen late Tuesday. The euro fell to $1.2203 from $1.2236, and the British pound slipped to $1.3771 from $1.3916.
In the commodities markets, natural gas sank 2 cents to $2.67 per 1,000 cubic feet, heating oil lost 5 cents to $1.92 per gallon, and wholesale gasoline fell 5 cents to $1.76 per gallon.
Gold slipped 70 cents to $1,317.90 per ounce, silver lost 3 cents to $16.41 per ounce and copper dropped 5 cents to $3.13 per pound.
2:15 p.m.: This article was updated throughout with closing stock prices.
11:55 a.m.: This article was updated with the latest stock market results.