U.S. stocks dropped Monday afternoon, putting the S&P 500 on track for its lowest close in 22 months, as a fresh drop in oil prices amid continuing fears of economic slowdown sparked a global flight into bonds and gold. The Nasdaq Composite COMP, -2.68% logged the heaviest losses as the theme of a collapse in the so-called FANG stocks — Facebook Inc. FB, -4.58% Amazon.com Inc. AMZN, -4.34% Netflix Inc. NFLX, +0.27% and Google parent Alphabet Inc. GOOGL, -2.38% — continued for a second straight session. The S&P 500 SPX, -2.10% tumbled 38 points, or 2%, to 1,842, led by losses in the financial sector. If the index closes at that level, it would mark its lowest settlement since April 2014. The S&P remains above its Jan. 20 intraday low of 1812.29. Energy stocks were also battered: Chesapeake Energy Corp. CHK, -33.66% plunged 36% and Williams Companies WMB, -32.01% sank 25%. The Dow Jones Industrial Average DJIA, -2.09% skidded 325 points, or 2%, to 15,878, its lowest level since its Jan. 20 closing low of 15,766.74. Success or failure in testing the Jan. 20 support levels "could indicate if we are really heading into a big bear market or nearing the end of a big correction within a bull market," said Colin Cieszynski, chief market strategist at CMC Markets, in emailed comments. In particular, the S&P's Jan. 20 intraday low of 1812.29 is a "significant short-term technical formation" after which there is "a downside pattern" that makes the chances of reversal much slimmer, said Frank Cappelleri, technical analyst at Instinet. While stocks slumped, demand for so-called haven assets surged, pushing gold prices GCJ6, +3.29% to a nearly nine-month high, and Treasury yields TMUBMUSD10Y, -4.12% which move inversely to prices, to a 12-month low. The Nasdaq Composite COMP, -2.67% slumped 106 points, or 2.5%, to 4,257. Facebook shares fell 3.7% Monday afternoon, while Twitter Inc. TWTR, -2.49% tumbled 3%, coming off an all-time low touched earlier in the session. Alphabet was down 1.5% and Netflix was dipping in and out of negative territory. "Is the market throwing out the baby with the bath water?" said James Meyer, chief investment officer at Tower Bridge Advisors, referring to the "rapid fall in prices for the highflying tech and biotech names that have been leading the market for the past 12 months." The First Trust Dow Jones Internet Index Fund ETF FDN, -4.37% which includes a basket of some of the biggest publicly traded Internet companies, was down nearly 20% year-to-date. "The former leaders of the previous bull cycle are the ones that get taken to the woodshed in the last phase of the downturn," Meyer said. Financials were the worst-performing sector on the S&P 500, down 2.9%, as ultralow interest rates and widening credit spreads have fueled concerns about banks' balance sheets. Financial giants Visa Inc. V, -6.21% and Goldman Sachs Group GS, -6.43% were leading the Dow industrials losses. The banking sector selloff started in Europe, where the region's banking gauge, the Stoxx Europe 600 Banks Index FX7, -5.59% has logged six straight weeks of declines, its longest weekly losing stretch since 2008. But the sector is getting hit hard in the U.S. as well, as investors realize that the Federal Reserve might have to hold off on the interest-rate hikes that banks were anticipating to boost their balance sheets, said Sahak Manuelian, managing director of equity trading at Wedbush Securities. The SPDR Financial Select Sector exchange-traded fund XLF, -3.10% has tumbled 11.4% year to date. As oil prices sank again amid continuing fears about the global oversupply of crude, the energy sector was hit, down 1% on the day. Monday's losses came on the heels of the biggest weekly drop in a month for U.S. equities. The Nasdaq Composite COMP, -2.67% fell 3.3% on Friday and logged a 5.4% weekly drop, its biggest in a month, Investors will be looking ahead to comments from Federal Reserve Chairwoman Janet Yellen on Wednesday and Thursday, when she testifies to Congress about the economy and monetary policy. Last week's jobs data prompted questions about the Fed's future interest-rate policy, as Friday's data showed slower jobs growth, but decent wage inflation. There is no data scheduled for Monday, nor any Fed speeches. The week will end with retail sales data. Hasbro Inc. HAS, +1.46% gained 1.4% after the company beat earnings and revenue estimates, boosted by sales of Star Wars toys. BioCryst Pharmaceuticals Inc. BCRX, -67.59% shares plummeted 68% after the pharmaceutical company reported failure in a study for a new drug to treat a rare genetic condition. Apollo Education Group Inc. APOL, +20.94% shares jumped 25% after the company said it would be taken private in a $1.1 billion deal. Source: MarketWatch
