Stocks whipped back and forth Monday, finally landing in negative territory following a seesaw day dominated by a large dumping of financial shares and a drop in oil that staggered large energy producers.
Investors went bargain-hunting for banks in the last half-hour of trading, but still left the major indexes lower. The market started with a 100-point rally in the Dow, which then fell to nearly 150 points negative in afternoon trading. The Dow finished off about 0.5 percent, while the S&P neared a 1 percent drop and the tech barometer Nasdaq edged lower.
The wishy-washy trading left market-watchers looking for long-term direction dissatisfied.
"What we're seeing here is the beginning of a new phase in the bear market," Gordon Charlop, of Rosenblatt Securities, said on CNBC. "What we're seeing now is demand destruction. It's going to be reflected in quarterly corporate earnings reports and it's going to be reflected in retailer earnings about back to school."
The day also saw a dramatic breaking of the four-month trend of oil and stocks moving in opposite directions. Oil dropped below $142 a barrel, yet stocks groped for direction. Oil closed down just more than $4, but electronic trading later pared some of those losses.
The inability of stocks to move positive while oil fell was seen as ominous for the economy.
"I see this as an increased probability of recession occurring here in the US," Ernie Ankrim, chief investment strategist at Russell Investment Group, said on CNBC. "The problem here is we saw oil come down and about the same time we saw a lot of other things go down."
A morning rally began as oil prices tumbled off record highs and investors showed optimism for the beginning of earnings season. But banks continued to be a sticking point for the market, and the major indexes fell into negative territory.
Freddie Mac was one of the biggest weighs on the S&P, with the government-sponsored mortgage lender dropping more than 9 percent on investors concerns over its capital positions amid continued weakness in the housing market. Fannie Mae also dropped sharply over the same issues.
But Fannie and Freddie finished off their lows for the day, which neared 20 percent at one point.
SunTrust also contributed to the downturn in banks after an analyst warned that the Atlanta-based institution was at risk from significant losses in its residential construction loan portfolio.
The market also slipped following comments from San Francisco Federal Reserve President Janet Yellen that Wall Street interpreted as friendly to an interest rate hike.