U.S stocks fell hard Friday, with the S&P 500 nearing a six-month low, as global markets reacted to crude's slide below $29 a barrel and Chinese shares stumbling into a bear market.
In the first nine days of trading this year, stocks around the world have lost a total of $5.7 trillion, roughly equivalent to the GDP of France and the U.K. put together, according to Bank of America Merrill Lynch.
Weaker-than-expected U.S. retail sales further dampened investor sentiment, with 2015 proving to be the softest year in six.
"Higher rent and healthcare costs and the desire to save more continue to more than offset the savings from lower gasoline costs," emailed Peter Boockvar, a noted bear and chief market analyst at the Lindsey Group. "Any further weakness in consumer spending (today's data does not include spending on services keep note) raises the recession odds."
Wiping away the prior day's gains, and after a 500-point fall, the Dow industrials (DJI) were down 438 points, or 2.7 percent, at 15,941 as of 2:44 p.m. ET. The S&P 500 (SPX) dropped 49 points, or 2.6 percent, to 1,873, with energy and technology pacing losses among its 10 major industry groups, all 10 of which were in in the red. The Nasdaq Composite (COMP) shed 150 points, or 3.3 percent, to 4,464.
Citigroup (C) reported fourth-quarter profit that topped expectations, as did earnings from Wells Fargo (WFC). Shares of both declined, with Citi off more than 6 percent and Wells Fargo off almost 4 percent.
Trading at 12-year lows as Iran readies to export oil into an already supply-heavy market, the price of U.S. crude fell under $30 a barrel. Energy companies around the world are laying off employees with the price of oil not yet finding a floor as markets brace for the possible lifting on Monday of international sanctions on Iran, a member of the Organization of Petroleum Exporting Countries, or OPEC.
The yield on the 10-year Treasury note used to figure mortgage rates and other consumer loans dropped under 2 percent for the first time since October.
Oil's plummet to a 12-year low has also roiled global markets amid worries that Chinese policy moves are not succeeding in bolstering growth in the the world's second-biggest economy.
Analysts, including Boockvar, say the current scenario changes the dynamics for inflation, and lessens the odds of interest rate hikes by the Fed this year.
"Let's put a nail in the March rate hike coffin. Rate hike odds are down to 16 percent, half of what it was two days ago," wrote Boockvar. "There is now less than 100 percent chance that we will get any rate hike this year. The December fed funds futures contract is priced at .595 percent which implies an 82 percent chance."