U.S. stocks declined sharply on Wednesday, with the fourth quarter starting off on a dour note after the S&P 500's seventh quarterly gain, as investors fretted global concerns, mixed U.S. economic data and earnings ahead.
Benchmark indexes posted their worst beginning to October since 2011 as investors sought safety in U.S. Treasury bonds and gold,with the CBOE Volatility Index, a measure of investor uncertainty, rising. The Russell 2000 fell into correction territory, down 10 percent from its July record.
"In the here and now, there are too many global-macro concerns for investors to have confidence," said Art Hogan, chief market strategist at Wunderlich Securities, listing worries about ISIS, Ukraine and Russia, the slowdown in China "and ebola, which is causing things like airline stocks to go down."
"As we sit on the eve of earnings season, and we had a bunch of weaker economic data today, and as you look at continued weakness in Europe, there is concern of does it bleed into earnings. It raises some doubt for investors as to what the earnings picture will look like," said Jim Dunigan, managing executive, investments, at PNC Wealth Management.
"October is a ghostly month anyway," Dunigan added.
"It's hard to get constructive with headlines of airstrikes in different parts of the world, so there are some doubts about what the economic environment looks like, particularly as we end the asset-purchase program," said PNC's Dunigan, referring to the Federal Reserve's bond buys, which are on track to conclude later this month.
Biotech companies involved in developing Ebola drugs rose, with Tekmira Pharmaceuticals and Sarepta Therapeutics among those rallying. Carriers including Delta Air Lines and JetBlue Airways fell on worries the disease might curb air travel. EBay slid after JPMorgan Chase and Jefferies Group downgraded shares of the online auctioneer.
"Will somebody decide not to go to Dallas? Maybe. I don't see that as a lasting situation," said Dunigan of the U.S. city where the first confirmed U.S. case of Ebola is hospitalized.
The Institute for Supply Management reported its manufacturing index hit 56.6 last month.
A separate report had construction spending dipping 0.8 percent in August.
"At least for today the economic data are a mixed bag; ISM manufacturing and spending could be characterized as weaker than expected," said Hogan.
U.S. private employers created 213,000 jobs last month, with the ADP National Employment Report roughly in line with expectations and coming ahead of Friday's nonfarm payrolls for September.