-China trade war. Benchmark U.S. crude lost $1.45 to $51.44 a barrel in electronic trading on the New York Mercantile Exchange.
Alarm bells rang in bond markets after the US Treasury yield inverted for the first time in more than a decade, suggesting that a recession could be on its way.
Wall Street and the USA dollar are also struggling because of the inversion of the yield curve.The yield on three-year U.S. government debt is more than the interest rate on five-year debt. This has not occurred since 2007.
Tuesday's losses more than erased the gains of the previous two trading days, when cautiously optimistic investors bid up stock prices amid hopes that USA and China were resolving their trade dispute.
Stock and bond trading will be closed in the U.S. Wednesday in observance of a national day of mourning for former President George H.W. Bush.
The trade dispute has rattled markets in recent months as signs emerged that it has begun affecting corporate profits.
"There are plenty of reasons to believe that growth in either the economy or the markets is going to soften next year", Frederick said. That seemed to counter Fed Chairman Jay Powell's remarks last week.
Dow Jones Plunges by 800 Points after Market Rally
Bond prices rose sharply.
Investors were focused on U.S. Treasury yields, where the benchmark 10-year yield fell to its lowest point since mid-September. The slide in bond yields, which affect interest rates on mortgages and other consumer loans, weighed on bank stocks.
Bank of America fell 5.7 per cent. The overall S&P financial sector dropped 4.03%.
The Nasdaq is up 255.03 points, or 3.7 percent. Advanced Micro Devices dropped 10.9 percent to $21.12, while Micron Technology lost 7.9 percent to $36.88. Toll Brothers also gave weaker-than-expected guidance for 2019, citing a slowing housing market. Morgan Stanley analysts said in a note that the market was underestimating the challenge those companies would face from Amazon Air.
OPEC'S MOVE: OPEC countries gathered Thursday to find a way to support the falling price of oil, with analysts predicting the cartel and some key allies, like Russian Federation, would agree to cut production by at least 1 million barrels per day. Brent crude, the worldwide standard, added 0.9 per cent to $62.22 per barrel in London.
CURRENCY: The dollar gained to 112.95 yen from Wednesday's 112.78 yen. The euro strengthened to $1.1349 from $1.1342. The pound erased a gain as the threat of a vote to bring down British Prime Minister Theresa May's government looms should Parliament reject her Brexit deal. Hong Kong's Hang Seng added 0.3 percent. Silver rose 1 percent to $14.64 an ounce.
European markets fell on Tuesday, with Germany's DAX losing 1.1 percent and France's CAC 40 dropping 0.8 percent.