Bank shares dragged Wall Street lower on Thursday on concerns the slowing global economy will continue to pressure down interest rates, while energy shares helped pare losses on a report that OPEC may move to cut oil production.
The S&P 500 touched its lowest in two years before bouncing back after the Wall Street Journal reported OPEC was ready to cooperate on production cuts, citing the UAE energy minister.
Financial shares, however, remained near their session lows and were on track to post their largest daily loss in five months.
“There’s great fear coming out of the banks,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.
He said the run into safety assets like Treasuries and gold indicated a capitulation among stock investors and “the downside risk from here is less than the upside potential.”
Spot gold prices jumped 4.3 percent, on track for their largest daily gain since June 2012. The yield on the benchmark 10-year U.S. Treasury note touched its lowest in more than three years.
The rout in bank stocks comes as investors fear that negative interest rates that a growing band of central banks has employed to spur economic growth is now part of the problem rather than the solution.
The Dow Jones industrial average fell 185.05 points, or 1.16 percent, to 15,729.69, the S&P 500 lost 13.9 points, or 0.75 percent, to 1,837.96 and the Nasdaq Composite added 6.43 points, or 0.15 percent, to 4,290.02.
Bank of America was one of the worst performing bank stocks, down 7.2 percent at $11.11.
Boeing tumbled 7 percent to $108.19, hit by a report that regulators are probing the planemaker’s accounting.
Cisco led tech stocks higher with a 10.4 percent increase at $24.87 after reporting a bigger-than-expected profit.
Declining issues outnumbered advancing ones on the NYSE by 2,576 to 525, for a 4.91-to-1 ratio on the downside; on the Nasdaq, 1,935 issues fell and 843 advanced for a 2.30-to-1 ratio favoring decliners.