(Bloomberg) -- U.S. stocks plummeted as of mid-day, with the S&P 500 poised to close at its lowest level since Aug. 25, and the Dow nearing is lowest point since Sept. 29. Crude prices continued to tumble and data showing falling retail sales rekindled concern about the health of the economy.

If the trading day were to end at the levels seen at 1:30 p.m., the Dow would have been down 522 points for the ninth-largest one-day point drop for the index, edging out the losses of Aug. 10, 2011.

Financial and energy companies led losses in the S&P 500 today, as only 20 companies in the gauge advanced. Goldman Sachs fell 3.6% after agreeing to settle a U.S. probe into its handling of mortgage-backed securities, a move that will cut its fourth-quarter profit by about $1.5 billion. Citigroup and Wells Fargo lost at least 3.8% even after reporting quarterly earnings that topped projections. Wal-Mart Stores dropped 2.1% after saying it plans to close 269 stores.

The S&P 500 lost 2.5%, falling to 1,873.77 at 12:10 p.m. in New York, wiping out gains posted on Thursday. Volume of S&P 500 companies was 59% higher than the 30-day average at this time of day. The Dow Jones Industrial Average slid 400 points, or 2.5% to 15,976.40.
"The growth picture in the U.S. is getting cloudier, and the fact that the Fed tightened in a weak environment is certainly not helping," said Krishna Memani, chief investment officer at Oppenheimer Funds. "The data is clearly supporting how the markets are feeling at the moment."

Oil fell back below $30 a barrel and the Shanghai Composite Index entered a bear market. Concern over China's slowdown and deepening crude losses have dominated investor sentiment in 2016, prompting a 6% plunge in the S&P 500 through Thursday. While advances yesterday in energy and health-care shares pushed the index higher, today's decline puts the gauge at risk of a third weekly decline.

The Chicago Board Options Exchange Volatility Index jumped 18% to 28.16. The VIX has surged 54% so far in 2016.

Corporate earnings may offer cues on the strength of the U.S. recovery, with seven S&P 500 companies posting results today. Analysts project earnings for firms on the gauge fell 6.7% in the fourth quarter, and downgrades to global profit growth haven't been this bad in seven years.

Stock index futures extended declines earlier after reports showed retail sales decreased in December to cap the weakest year since 2009 and a Fed gauge of manufacturing in New York slumped. The 0.1 percent drop in retail sales matched the median forecast of economists surveyed by Bloomberg. The New York Fed's Empire manufacturing index plunged to minus 19.37, lower than economists had forecast.

The Fed has stressed the pace of further rate increases will be gradual, but data-dependent. Traders are pricing in a 29% chance of the central bank acting in March, while odds for an increase this month have stayed low since the December liftoff.

"The drama overnight is more related to oil prices not finding a floor," Oppenheimer's Memani said. "If it was just China and everything else was OK, we'd see through that. But when China is down and oil drops every day, the market recognizes it has substantial issues. "

Goldman Sachs said in a report that oil will turn into a new bull market before the year is out as the price rout shuts down production, putting the U.S. shale-oil boom into reverse in the second half of the year. As U.S. production slumps by 575,000 barrels a day, global oil markets will tip from surplus to deficit, the bank said in a report.

The S&P 500 declined 9.8% from its record in May through Thursday, and is 2.9% above a low reached in August after a rout that was also triggered by anxiety over the impact of China's weakness on worldwide growth.

BlackRock fell 5% after it reported fourth-quarter earnings that missed analysts' estimates as rising expenses offset higher revenue.

-- With assistance from Roxana Zega.

Read more: 

Register or login for access to this item and much more

All Bank Investment Consultant content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access