Wall Street's recent sell-off deepened on Wednesday, with the S&P 500 closing at its lowest in over a year as US oil prices plummeted to 2003 lows.
The equities rout was widespread, hitting nine of the 10 major S&P sectors. The small-cap Russell's 2000 index fell 3.6 per cent before reversing its loss late in the session.
S&P energy sector
The beaten-down S&P energy sector fell 2.93 per cent, leading the losers. Exxon dropped 4.21 per cent and Chevron slumped 3.10 per cent.
Collapsing oil prices and fears of a slowdown in China, the world's second largest economy and a key market for US companies, have led the S&P 500 to drop 9 per cent this year. In the past six months, the energy sector has fallen 26 per cent.
"The fear is, 'Is tomorrow going to bring more selling?' People are not even thinking about today, they're thinking about tomorrow," said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
US crude sank 6.6 per cent on Wednesday as a supply glut bumped up against bearish financial reports that deepened worries over demand.
But a late-day bounce in US oil prices helped reduce losses in stocks.
"If you look at crude prices, they are shooting right back up," Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, said ahead of the close.
The S&P 500 ended down 1.17 per cent at 1,859.33, its lowest close since October 2014. It had fallen as low as 1,812.29.
The Dow Jones industrial average ended 1.56 per cent lower at 15,766.74 points.
After a brief late-day rally into positive territory, the Nasdaq Composite lost steam and ended down 0.12 per cent at 4,471.69.
The CBOE volatility index, Wall Street's fear gauge, jumped 5.9 per cent to 27.59.
Strength last year in Netflix, Facebook and a handful of other technology stocks masked troubled sentiment in other S&P 500 components, said R Squared portfolio manager Riad Younes.
"You had a crowded trade on a few names that kept the average much higher than it should be," Younes said. "It feels like a bear market for the average stock."
IBM weighed the most on the Dow, falling 4.88 per cent after disappointing earnings report.
Netflix ended down 0.14 per cent despite better-than-expected growth in its subscriber base.
An unusually high 12.5 billion shares changed hands on US exchanges, well above the 7.8 billion daily average for the past 20 trading days, according to Thomson Reuters data.
The New York Stock Exchange recorded 2,271 stocks advancing stocks and 883 decliners. On the Nasdaq, 1,551 issues fell and 1,331 advanced.
The S&P 500 posted no new 52-week highs and 182 new lows; the Nasdaq recorded 5 new highs and 728 new lows.