NEW YORK -- U.S. stocks lost more than 1 percent Wednesday in the S&P 500's biggest decline since Oct. 13 as another big drop in oil prices hammered energy shares.
The S&P 500 has lost 2.4 percent this week so far, reversing a recent trend. The Dow and S&P 500 had capped a seventh straight week of gains Friday.
Selling accelerated in afternoon trading, and by day's end, NYSE declining issues outnumbered advancers by a ratio of 4.66 to 1 ratio. In a sign of rising investor caution, the CBOE Volatility index rose 24.5 percent, its biggest daily percentage gain since July 31.
The S&P energy index fell 3.1 percent and led declines on the S&P 500, but selling was broad and all 10 S&P sector lost at least 1 percent on the day.
Brent crude touched a new five-year low of $63.56 as Saudi Arabia's oil minister reiterated that he has no plans to cut output, while OPEC forecast global demand for OPEC crude in 2015 to fall to the lowest level in more than a decade.
%VIRTUAL-pullquote-It's a sea of red, a uniform purge that is related to concerns about global demand.%Falling oil prices have added to worries about global demand and raised concerns about earnings for energy companies, with year-end tax selling putting additional pressure on the group. The S&P energy sector is now down 14.7 percent for 2014, the worst performing of the 10 major S&P sectors.
"It's a sea of red, a uniform purge that is related to concerns about global demand," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
"We've had this oil issue lingering over the market, and OPEC trimming their forecast is weighing on equity investors, who had precipitated the concerns about global demand way back in September."
The Dow Jones industrial average (^DJI) fell 268.05 points, or 1.51 percent, to 17,533.15, the Standard & Poor's 500 index (^GPSC) lost 33.68 points, or 1.64 percent, to 2,026.14 and the Nasdaq composite (^IXIC) dropped 82.44 points, or 1.73 percent, to 4,684.03.
The number of NYSE stocks making new 52-week lows totaled 271, while 115 made new highs.
Shares of Yum Brands (YUM) dropped 6.2 percent at $70.53 a day after it again lowered its profit forecast for the year, hurt by slower-than-expected sales recovery in China following a food safety scare.
Among the day's gainers were airline shares, including Southwest Airlines (LUV), up 1.8 percent at $41.48. Barclays said airlines stand to see a decline of about $10 billion in fuel costs in 2015.
About 7.4 billion shares changed hands on U.S. exchanges, above the 6.7 billion average for the last five sessions, according to BATS Global Markets.
-With additional reporting by Chuck Mikolajczak.
What to watch Thursday:
At 8:30 a.m. Eastern time, the Labor Department reports weekly jobless claims, and import and export prices for November; the Commerce Department reports retail sales for November.
The Commerce Department reports business inventories for October at 10 a.m.
These selected companies are scheduled to release quarterly financial results:
Market Wrap: Indexes Tumble as Oil Prices Fall Further
If you don't already have one, now's the time to establish a traditional individual retirement account or a Roth IRA, and if you're self-employed, a Solo 401K or SEP-IRA. Don't worry if you don't have enough money to fully fund the account. As long as you establish the account by the end of the calendar year, you'll be able to retroactively contribute to it through April 15 of next year, and those funds can still count toward your 2014 taxes.
For 2014, you're allowed to contribute up to $17,500 to your 401(k). (If you're 50 and over, that limit increases to $23,000.) This is the maximum you're able to save per year and still defer paying income tax on that money.
Since 401(k) contributions must be made through payroll deductions, talk to your company's payroll department about adjusting your December contribution or adding a lump-sum amount from your holiday bonus when you receive it. Also, chat with your human resource department to see if it will let you retroactively earmark contributions made prior to April 15, 2015 for the 2014 tax year.
If you're age 70½ or older, you're required to take a certain amount from your 401(k) and traditional IRA each calendar year. If you don't, you could be facing sizable penalty fees from the IRS (as in 50 percent of the amount you should have taken out). To find out how much you should take out by the end of the year, talk to your financial adviser or see this calculator.
You may qualify for a state income tax deduction by contributing to your children's 529 college savings plan.While every state's 529 tax deduction rules and contribution limits vary, most states will accept contributions until all account balances for the same beneficiary reach $235,000 to $412,000. Check with your state to discover your specific limits.
Depending on your financial situation, converting some of the funds from your traditional IRA into a Roth IRA could be a smart strategy. You're able to withdraw the funds from a Roth IRA tax-free, and Roth IRAs are excluded from required minimum distribution rules. Furthermore, if you're ineligible to contribute to a traditional or Roth IRA due to income limitations, you can still contribute to a "nondeductible" traditional IRA and then process what's known as a "backdoor" Roth conversion.
When you sell stocks for a gain, you face capital gains taxes. But you can counterbalance these gains by selling some of your "losing" stocks and writing off the losses. Talk with your accountant about whether this strategy would work for you; if it will, you need to harvest your losses before the year closes out.
Do you have a flexible spending account, or FSA, at work? Check the detail of your company's policy; many are "use it or lose it," meaning if you don't use the full amount in your FSA by year's end, that money will not roll over.
New federal laws permit employers to let their workers roll over a maximum of $500, but it's the employers choice whether or not to allow this rollover. Also, some employers give their workers a grace period until March of the following year to use the prior year funds, while other employers require that the funds are used by Dec 31. Check with your HR department to learn your employers' rules.
Remember that FSA funds can be used for a lot more than just prescriptions and co-pays. If you have money you need to spend before it's gone, you may also be able to use it for things like dental work, glasses or contact lenses, and even some qualified over-the-counter medicine and supplies.
Secure some additional tax deductions for 2014 by donating to a charitable cause. As long as you itemize your donations, you can claim everything from cash donations to goods to used vehicle donations. You can even give some of your stock to charity, thus avoiding capital gains tax.
Just be sure to get a signed and dated receipt from the charity, noting the amount of your contribution -- especially if you're donating goods instead of cash. As an added precaution, take photographs of any high-value donations (over $250).
You may qualify for another tax credit by making energy-efficient home improvements like windows, insulation and roofing. You'll also save more in the long run on your home's heating and cooling costs. To see which improvements qualify for a tax credit, go to the federal government's energy savings website, which lists comprehensive details that are broken down state-by-state.
If you need to enroll for coverage on the healthcare exchanges, you have until Dec. 15, 2014 to sign up for coverage that begins on Jan. 1, 2015. If you're already enrolled in a marketplace plan, you may be able to change your coverage if you've had a qualifying life event, such as a marriage or a move to another state.
You can give up to $14,000 to individuals per year without needing to file a gift tax return. If you're married, you and your spouse can each bequeath gifts of $14,000 to an individual without triggering a taxable event. If you decide to give a major financial gift to your children, talk to your kids first about strong money-management skills. Here's a free guide to help to talk to your kids about money.
Giving a little bit each year can also help reduce your overall estate tax burden (although the estate tax exemption is $5.34 million in 2014, which means few taxpayers will need to worry about this).