By Ellie Ismailidou and Barbara Kollmeyer, MarketWatch

Twitter falls to all-time-low; FANG stocks, financials crumble;

Stocks trimmed sharp losses but still ended broadly lower Monday, with the S&P 500 posting its lowest close since April 2014 amid a fresh drop in crude oil prices, jitters over European banks and continuing fears of a global economic slowdown.

The Nasdaq Composite logged the heaviest losses as the theme of a collapse in the so-called FANG stocks--Facebook Inc. (FB), Amazon.com Inc. (AMZN) Netflix Inc. (NFLX) and Google parent Alphabet Inc. (GOOGL) -- continued for a second straight session.

The S&P 500 closed 26.61 points, or 1.4%, lower at 1,853.44, its lowest closing level since April 2014. The S&P remained above its Jan. 20 intraday low of 1812.29.

A fresh drop in oil prices (http://www.marketwatch.com/story/oil-pops-above-31-a-barrel-as-traders-keep-close-watch-on-the-dollar-2016-02-08)amid continuing fears about the global oversupply of crude weighed on materials stocks, the worst performer on the S&P 500, down 2.7%, followed by financials, down 2.6%. The energy sector, however, was resilient overall and the only one to close in positive territory, up less than 0.1%.

Some individual energy stocks were battered, however. Chesapeake Energy Corp. plunged 33.2% and Williams Companies (WMB) sank 34.9%, leading the S&P 500 decliners. See: Chesapeake shares crater, bonds tank as investor concerns mount (http://www.marketwatch.com/story/chesapeake-shares-crater-bonds-tank-as-investor-concerns-mount-2016-02-08).

The Dow Jones Industrial Average pared an earlier 400-point decline to settle with a loss of 177.92 points, or 1.1%, at 16,027.05.

Colin Cieszynski, chief market strategist at CMC Markets, said stocks falling below their Jan. 20 lows "could indicate if we are really heading into a big bear market or nearing the end of a big correction within a bull market." A bear market is generally defined as a decline of at least 20% from a recent peak, while a correction is a 10% slide.

The S&P fell below its Jan. 20 closing low 1,859.33 but remained above its Jan. 20 intraday low of 1812.29, which 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 to their largest one-day gain in over a year, (http://www.marketwatch.com/story/gold-jumps-to-near-4-month-high-as-investors-turn-to-safety-2016-02-08) and Treasury yields (http://www.marketwatch.com/story/10-year-treasury-yield-falls-to-one-year-low-2016-02-08), which move inversely to prices, to a 12-month low.

The Nasdaq Composite slumped 79.39 points, or 1.8%, to 4,283.75, its lowest closing level since October 2014. Facebook shares fell 4.2%, while Twitter Inc. (TWTR) tumbled 5.3% to an all-time low. Alphabet erased heavy losses to close flat and Netflix closed slightly higher after dipping in and out of negative territory throughout the session.

"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) 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 second-worst-performing sector on the S&P 500, down 2.6%, as ultralow interest rates and widening credit spreads fueled concerns about banks' balance sheets. Financial giants Visa Inc. (V) and Goldman Sachs Group (GS) led Dow decliners, down 5.3% and 4.6%, respectively.

The banking sector selloff started in Europe, where the region's banking gauge, the Stoxx Europe 600 Banks Index has logged six straight weeks of declines, its longest weekly losing stretch since 2008 (http://www.marketwatch.com/story/why-a-selloff-in-european-banks-is-ominous-2016-02-07).

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) has tumbled 15% year to date.

Read: Bank stocks rocked by recession fears (http://www.marketwatch.com/story/bank-stocks-rocked-by-recession-fears-2016-02-03)

Monday's losses came on the heels of the biggest weekly drop in a month for U.S. equities (http://www.marketwatch.com/story/wall-street-gets-the-jitters-ahead-of-key-jobs-data-2016-02-05). The Nasdaq Composite 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.

Read:Why consumers may keep economy from sinking (http://www.marketwatch.com/story/why-consumers-may-keep-economy-from-sinking-2016-02-07)

Stocks to watch

Hasbro Inc. (HAS) ended flat after reversing earlier gains after the company beat earnings and revenue estimates, boosted by sales of Star Wars toys.

BioCryst Pharmaceuticals Inc. (BCRX) shares plummeted 71% after the pharmaceutical company reported failure in a study for a new drug to treat a rare genetic condition (http://www.marketwatch.com/story/biocryst-fails-in-study-for-new-drug-to-treat-rare-genetic-condition-2016-02-08).

Apollo Education Group Inc. (APOL) shares jumped 22% after the company said it would be taken private in a $1.1 billion deal (http://www.marketwatch.com/story/apollo-education-group-to-be-taken-private-2016-02-08).

Read:Disney, Coca-Cola headline consumer-heavy earnings week (http://www.marketwatch.com/story/disney-coca-cola-headline-consumer-heavy-earnings-week-2016-02-07)

Other markets

European markets also tumbled, with the Stoxx Europe 600 index dropping to a 15-month low (http://www.marketwatch.com/story/european-stocks-drop-to-15-month-low-2016-02-08). and the Germany's DAX 30 index (DAX) closing in bear-market territory.

The Nikkei 225 index (http://www.marketwatch.com/story/japan-australia-stocks-start-the-day-down-on-fed-uncertainty-2016-02-07) closed up 1%, boosted by upbeat earnings, while many other markets in Asia were closed for the Lunar New Year holiday. See: When are Chinese markets closed for holiday? (http://www.marketwatch.com/story/when-is-chinas-stock-market-closed-for-lunar-new-year-2016-02-05)

Data over the weekend showed China's foreign currency reserves fell by $99.469 billion in January, hitting the lowest level in more than three years (http://www.marketwatch.com/story/chinas-foreign-currency-reserves-drop-9947-bln-2016-02-06).

The dollar (http://www.marketwatch.com/story/dollar-rises-as-tokyo-stocks-recover-2016-02-08) pulled back against its major rivals, tumbling to a 13-month low against the yen, which was viewed as a haven asset.

 

(END) Dow Jones Newswires

February 08, 2016 16:51 ET (21:51 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.
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