Stocks fall sharply as banks, tech sector take a beating

Chesapeake Energy’s stock plummeted one-third following speculation that the company was preparing to file for bankruptcy protection. It denied those reports.

Wall Street rode another wave of selling Monday that sent U.S. stocks sharply lower, before a late-afternoon pullback stemmed some of the losses.

Investors unloaded materials, financials and other stocks, briefly knocking the Dow Jones industrial average down more than 400.

Speculation that Chesapeake Energy might be preparing to file for bankruptcy protection helped push its stock price down 33 percent on Monday, making it one of the worst performers in the S&P 500 index.

In response, the company said it “currently has no plans to pursue bankruptcy.”

Technology shares, which soared last year, were targeted for especially aggressive selling, bringing the tech-heavy Nasdaq composite index down almost 20 percent from its record high last year.

The losses left major market indexes down for the second day in a row, extending what has been a dismal beginning of 2016 for the stock market, its worst start to a year on record.

“Traders are worried that the financial market weakness that we’re experiencing is going to lead to weakness in the real economy,” said Jim McDonald, chief investment strategist at Northern Trust.

The Dow ended down 177.92, or 1.1 percent, to 16,027.05. The S&P 500 lost 26.61, or 1.4 percent, to 1,853.44. The Nasdaq composite dropped 79.39, or 1.8 percent, to 4,283.75, and it is within 110 of being in what Wall Street considers a bear market, or a 20 percent drop from its high.

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For the year, the Dow is now down 8 percent, while the S&P 500 is down 9.3 percent. The Nasdaq has lost 14.5 percent this year.

The stock market has been in a slump for much of this year after a lackluster 2015. Several factors have kept investors in a selling mood, including falling crude oil prices, the impact of a stronger dollar on U.S. company earnings, and heightened concern that economic growth is slowing in China and elsewhere.

Fears of a global economic downturn are now heightening concerns that the U.S. economy could slide into a recession later this year.

Investors looking for some positive outlooks for 2016 aren’t finding much in the latest wave of company earnings, either.