Dow drops over 350 points as oil sinks below $30

Why oil’s plunge is freaking out the stock market

Call it a Super Bowl hangover.

The stock market’s terrible start to 2016 just got worse with the Dow dropping more than 350 points on Monday.

Things are even bleaker for the technology-heavy index Nasdaq, which tumbled 2.8% and is on track to close at its lowest level since at least October 2014. The S&P 500 is down 2% and is now off 10% this year.

“There’s too much fear and too little greed right now,” said David Kelly, chief global strategist at JPMorgan Funds.

Wall Street is once again under pressure from the crash in oil prices. Oil fell another 3% and dropped back below $ 30 a barrel. Cheap oil is great for consumers but its dramatic downfall continues to alarm investors who fear what it signals about the health of the broader economy.

Energy stocks continue to tank, with ConocoPhillips (COP) and Hess (HES) down another 2%. But those losses pale in comparison with Chesapeake Energy (CHK), the energy giant that plummeted 51% and was halted amid a report that it hired restructuring attorneys.

The markets are also expressing alarm about European banks. Stock markets in Europe continue to slump badly, with Germany’s DAX and France’s CAC 40 dropping about 2.5% apiece.

Bespoke Investment Group noted rising “market fears over the solvency — profitability, liquidity and stability — of the European banking system.” The firm pointed to a huge rise in the cost to insure European bank debt.

It’s the “kind of parabolic price action that feels like a crisis, even if there’s no concrete evidence that one is afoot,” Bespoke wrote.

Few stocks in the Nasdaq have anything to do with oil prices or European banks — yet the index continues to plunge. The Nasdaq is now down nearly 15% on the year, compared with “only” 8% for the Dow. Former tech darlings Netflix (NFLX, Tech30), Tesla (TSLA) and Amazon (AMZN, Tech30) dropped again on Monday, continuing their 2016 plunge that symbolizes investors’ waning appetite for risk.

“Tech stocks were the ATM machines. That’s where everyone made the most profits. But the bigger they are, the harder they fall,” said Michael Block, chief market strategist at Rhino Trading.

One of the only bright spots this year is gold, which tends to rise during times of fear. Gold prices have soared 12% this year, including a 3% surge on Monday to $ 1,198 an ounce. It’s gold’s best day since December 2014.

CNNMoney’s Fear & Greed Index, which measures sentiment based on several market indicators, is back in “extreme fear.” The gauge briefly improved to just “fear” last week.

Here’s another sign of fear: Bond prices are surging as investors flee to the relative safety of government debt. The 10-year Treasury yield, which moves opposite the price, slipped to a one-year low of 1.76%.

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