U.S. Stocks Sink as Epic Rally Falters

Volatility returned to U.S. markets, with stocks tumbling back toward a bear market after the biggest rally in nearly a decade faltered. Oil and the dollar gave up some of the previous session’s advances. Oil slipped below $ 46 a barrel.

The S&P 500 sank more than 1.8 percent, unable to add to a 5 percent surge that was the biggest since March 2009. Technology and consumer shares that led the gain fell the most Thursday. The Dow Jones Industrial Average lost more than 400 points a day after its first 1,000 point gain. The Nasdaq 100 slid 2 percent, eroding some of its 6 percent surge.

The S&P 500 is careening toward its worst month of the record bull run and is down nearly 17 percent in the quarter as everything from higher interest rates to political turmoil in Washington to concern about global growth hammer at investor sentiment. Havens came back in vogue, with Treasury 10-year yields slipping below 2.8 percent, and gold climbing with the yen.

The euphoria of equity investors evaporated from Wednesday, when investors cheered a reminder of the American consumer’s strength and got reassurance on the tenure of the Federal Reserve chief and progress on U.S.-China trade talks. While there was no obvious catalyst for the return to selling that took stocks within a whisker of a bear market, the violence of yesterday’s rally made it difficult to sustain. The Cboe Volatility Index jumped to 33.

Elsewhere, WTI crude oil prices gave up a slice of the more than 8 percent gain from the previous day. Losses in utility companies and carmakers dragged the Stoxx Europe 600 Index into the red. Asian shares were mixed, though Tokyo’s Topix Index posted the biggest advance in two years. Emerging markets continue to outperform, thanks to expectations of less aggressive tightening by the Fed.

Read more on the latest twists and turns: Plenty of big rallies occurred during a bear-market downturn A history of U.S. presidential comments on stocks Insiders are pouring money into equities Three crazy statistics on a wild day of trading Valuations tumbled before the Wednesday rally

And see more analysis in our Markets Live blog.

Here are some events investors may focus on in coming days:

U.S. to delay new-home sales data due Thursday because of partial government shutdown. Baker Hughes releases its weekly data on active U.S. oil rigs on Friday. Monday is year end. Brazil’s new president is sworn in on Tuesday.

And these are the main moves in markets:

Stocks

The S&P 500 Index fell 1.8 percent as of 9:54 a.m. New York time. The Nasdaq 100 lost 2 percent and the Dow Jones Industrial Average fell more than 400 points. The Stoxx Europe 600 Index fell 1.5 percent to the lowest in more than two years on the biggest fall in a week. The MSCI All-Country World Index increased 0.1 percent to the highest in a week. The MSCI Emerging Market Index climbed 0.1 percent, the first advance in more than a week.

Currencies

The Bloomberg Dollar Spot Index declined 0.1 percent. The euro rose 0.2 percent to $ 1.1374. The Japanese yen jumped 0.5 percent to 110.85 per dollar. The British pound decreased 0.1 percent to $ 1.2626, the weakest in more than a week. The MSCI Emerging Markets Currency Index gained 0.1 percent, the largest rise in more than a week.

Bonds

The yield on 10-year Treasuries fell four basis points to 2.77 percent. Germany’s 10-year yield decreased one basis point to 0.24 percent, the lowest in a week on the largest dip in almost two weeks. Britain’s 10-year yield increased three basis points to 1.292 percent. The spread of Italy’s 10-year bonds over Germany’s declined three basis points to 2.5514 percentage points to the narrowest in a week.

Commodities

The Bloomberg Commodity Index decreased 0.2 percent. Brent crude fell 1.7 percent to $ 53.54 a barrel. LME copper jumped 0.8 percent to $ 6,005.00 per metric ton, reaching the highest in more than a week on the first advance in more than a week and the biggest increase in more than two weeks. Gold increased 0.6 percent to $ 1,274.98 an ounce, the highest in more than six months.