CNBC-U.S. stocks traded more than 1 percent lower on Thursday as investors weighed fresh lows in oil prices and continued uncertainty over the Fed amid data releases.
The S&P 500 fell into negative territory for the year, down nearly 0.2 percent for 2015, with consumer discretionary the greatest decliner on the day. Energy is the greatest laggard for the year, down 17 percent.
The Dow Jones industrial average briefly fell more than 225 points, with Merck and Disney leading nearly all blue chips lower. The index is off about 4 percent for the year so far.
The Nasdaq Composite also lost more than 1 percent, with Apple off more than 2 percent and biotechs falling more than 1.5 percent. The index is up more than 4 percent year-to-date.
“I think people are just worried in general about the Federal Reserve and I think that’s a primary culprit,” said Robert Pavlik, chief market strategist at Boston Private Wealth.
He expects one rate hike this year. “It’s making people unwind their risk-on trades,” he said.
Pavlik and other analysts also noted low trade volume, declines in oil prices and the lack of bullish catalysts as behind the selloff.
“I think change hits the market. Markets don’t like rapid movement,” said James Meyer, chief investment officer at Tower Bridge Advisors. “I think you have investors, traders… who have made wrong bets and have to unwind. Part of it is momentum and momentum is down.”
He noted some volatility in oil prices as futures contracts expire. The WTI crude contract rolls from September to October after the settle.
Crude oil attempted slight gains after dipping below $41 a barrel in early trade Thursday to hit a fresh six-and-a-half-year low. Brent crude fell about 1 percent to below $47 a barrel.
“We continue to be in lockstep with energy and it’s going to be difficult to get out of that,” said Art Hogan, chief market strategist at Wunderlich Securities.
Declines in global markets also pressured U.S. equities. European stocks traded lower, with the STOXX Europe 600 off more than 1 percent as concerns about China, the Federal Reserve weighed.
The Shanghai Composite plunged 3.4 percent as investors failed to gain confidence in government support measures.
“Oil’s sliding down, China’s currency is getting hurt. Kazakhstan’s and Vietnam’s currencies (are) all being devalued. The instability in the global marketplace is a great concern here,” said Adam Sarhan, CEO of Sarhan Capital. “What’s getting investors to go out there?”
Kazakhstan’s tenge lost more than a quarter of its value on Thursday after the oil producing central Asian nation, hit by a sharp fall in world crude prices, introduced a freely floating exchange rate for the currency.
The State Bank of Vietnam (SBV) devalued the dong (VND) by 1 percent against the dollar on Wednesday—its third adjustment so far this year—and simultaneously widened the trading band to 3 percent from 2 percent previously, the second increase in six days.
Analysts also pointed to ongoing uncertainty about the timing of a rate hike, as the Fed minutes indicated conditions for liftoff are “approaching” but not present.
Traders will digest several pieces of economic data out Thursday that could shed further light on the Fed.
Initial claims data came in at 277,000, but remained consistent with an improving labor market trend that could support a rate hike this year.
The U.S. 2-year Treasury note yield near 0.67 percent, while the 10-year yield traded lower near 2.09 percent.
The U.S. dollar traded slightly lower against major world currencies, with the euro above $1.11.
The Philadelphia Fed index for August came in at 8.3, while leading indicators declined 0.2 percent in July. Existing home sales rose to an eight-year high.
Earlier in the week, the Empire State survey plunged to a 2009 low.
U.S. stocks closed lower on Wednesday after the earlier-than-expected release of the minutes and under pressure from global growth concerns and a plunge in oil prices.