U.S. stocks closed sharply lower Tuesday, lead by energy, as investors digested a spike in volatility and falling oil prices, while looking ahead to next week's Federal Reserve meeting.
"We're back in the world of volatility, which I don't think is a surprise since we've had fears over the Fed and falling commodity prices," said Kate Warne, investment strategist at Edward Jones.
"I tend to look at the market from three different perspectives: Technical, fundamental and psychological," said Daniel Deming, managing director at KKM Financial. "You've got a technical breakdown; ... fundamentals are pretty weak" and the market's psychology has been affected by several changes in expectations regarding economic growth and the election, among others. "Now, with the possibily that [Donald] Trump might turn this into a race again after it was all said and done, the market hasn't completely priced that in."
The Dow Jones industrial average closed more than 250 points after dropping nearly 300 points, with Goldman Sachs contributing the most losses.
"The fact of the matter is the market is in a downward cycle," said Peter Cardillo, chief market economist at First Standard Financial. "With the lack of macro news, the market is trapped in a sea of worry right now."
The S&P 500 dropped approximately 1.5 percent, with energy falling about 2.9 percent, leading all sectors lower. West Texas Intermediate futures fell 3 percent to settle at $44.90 per barrel after the International Energy Agency said the re-balancing in the oil market will take longer than expected.
Consumer discretionary, financials and health care also turned negative year to date.
"Yesterday's rebound did not improve the posture of our short-term indicators, which remain supportive of the pullback. The SPX has confirmed a breakdown below its 50-day moving average in a reflection of weak short-term momentum," said Katie Stockton, chief technical strategist at BTIG. "More climactic selling is needed to bring our market internal measures to oversold extremes, therein signaling a tradable low."
The Nasdaq slid 1.1 percent, despite strong gains in Apple.