The global descent of stock prices resumed Wednesday, as shares of some of the market's top recent performers succumbed to the selling pressure.
Investors sold off several of the biggest winners of last year, targeting large U.S. consumer and health-care stocks, which were the two best performing sectors of the S&P 500 in 2015.
The biggest losers in the U.S. market Wednesday included Netflix Inc., which sank 8.6 per cent, and Amazon.com Inc., which fell 5.8 per cent. Both stocks more than doubled over the course of 2015, playing a part in propping up the overall market.
The deterioration in investor confidence extended a historically bad start to the year, as fears over global growth provoked investors into cutting risk.
"We're in a perfect storm," said Yousef Abbasi, global market strategist at JonesTrading Institutional Services LLC in New York. "Even though we knew a lot of these factors in the past, they all seemed to come together at the start of 2016 to take a bite out of people. There's a combination of a buyer's strike, some disinterest, some confusion and, to be completely honest, some exasperation."
Nearly seven years into the bull market for U.S. stocks, investors are increasingly doubtful of China's growth prospects at the same time as the global energy market is gripped by an unprecedented crash.
On Wednesday, the S&P 500 index fell 2.5 per cent, bringing the benchmark's year-to-date losses up to 7.5 per cent in just eight trading sessions. The S&P/TSX composite index, meanwhile, fell 1.6 per cent, with the energy sector again among the biggest losers on the day as crude oil prices were largely steady.
The North American trading day began with some promise of stability after Asian and European stocks rose modestly, by most measures. Even West Texas intermediate clawed back some lost ground in morning trading after dipping below $30 (U.S.) a barrel on Tuesday for the first time in more than 12 years.
Canadian and U.S. equities also opened higher, but the rally melted away, and the downslide resumed for no apparent reason, said Martin Pelletier, a portfolio manager and co-founder of TriVest Wealth Counsel.
"It's certainly looking like the telltale signs of a bear market," he said. "A year and a half ago, things would go higher for no reason."
As for growth stocks such as Netflix and Amazon, "it isn't surprising to see people lock in some profit on those," Mr. Pelletier said.
"They're going to take some profits on their big winners. Or they're just going into cash, which is also happening."
While the tumult seen in financial markets last week had shown signs of receding since Chinese policy-makers intervened to stabilize the yuan, demand for havens returned Wednesday as U.S. equities failed to add to global stock gains.
The Standard & Poor's 500 Index fell below 1,900, a level it's closed below only four times in the past 14 months. The Nasdaq 100 Index neared its worst day since Aug. 24, as selling was heaviest in technology and consumer shares.
The Russell 2000 Index was poised to enter a bear market.
Brent crude dipped below $30 for the first time since 2004.
Meanwhile, Treasuries surged amid signs that demand for the relative safety of bonds is rising. The yield on the 10-year Treasury note fell to 2.04 per cent. Gold traded above $1,090 an ounce.
The Chicago Board Options Exchange Volatility Index climbed 8.4 per cent to 24.36, after posting its first back-to-back weekly gains since July to start the year.
While investors seem to be fixated on risks at the moment, sell-offs can also be seen as buying opportunities, Mr. Pelletier said.
"If you're a long-term investor, these are the times when there are opportunities out there, when there is blood in the water."