Stocks closed sharply lower on Tuesday as new fears about the U.S. election weighed on the broader market, while crude prices fell amid a strong dollar and Treasury yields rose.
Some analysts said the high-profile sparring between Republican Donald Trump and House Speaker Paul Ryan was fueling concerns that more Republican seats could be lost in the House of Representatives and that there could even be a Democratic sweep in Congress. As a result, health care and biotechnology stocks, which were already under pressure, took a major hit.
"I would say it is a three-pronged sell-off: strong dollar, higher rates, and a Dem sweep," said John Spallanzani, chief macro strategist at GFI Group. "Biotechs and heath care are down the most on fears of a Democratic sweep."
"When you look at Sunday's debate, both candidates were talking about lowering health care costs," said Chuck Self, CIO of iSectors. "There might be some selling pressure from that."
The S&P fell about 1.25 percent, and broke below its 100-day moving average of 2,138.53, with health care shedding 2.5 percent and financials among the worst-performing sectors.
The Nasdaq dropped approximately 1.5 percent, with the iShares Nasdaq Biotechnology ETF (IBB) dropping about 3.8 percent. The IBB was led lower by Illumina, which saw its shares plunge 24.8 percent after the firm slashed its revenue guidance.
Illumina shares in past monthSource: FactSet
"You've got a rise in Treasury yields; you've got oil prices falling," said Robert Pavlik, chief market strategist at Boston Private Wealth. "You put that together with the dollar rising and Alcoa falling after earnings, and you get a sell-off."
"This is a very short-term focused market. I don't think anything has really changed from yesterday," he said. "This is a very crazy environment because people are just so unsure of what they want to do."
The U.S. dollar rose 0.74 percent against a basket of currencies, hitting its highest level since July 27, as bets that the Federal Reserve would raise rates in December poured in. The British pound was among the biggest laggards against the U.S. currency, falling about 2 percent.
Treasury yields, meanwhile, also rose, with the two-year note yield near 0.86 percent and the benchmark 10-year note yield around 1.76 percent. The benchmark yield also hit its highest level since June 3, before the Brexit vote.
"There have been a few developments that have been pretty risk averse that seem to be bubbling up," said Gene Tannuzzo, portfolio manager at Columbia Threadneedle Investments, including the rising dollar, concerns over the Chinese housing market and central bank tightening.