NEW YORK (TheStreet) -- It was a brutal day on Wall Street as crude oil plunged below $50 a barrel, punishing oil stocks and dealing a hefty blow to the broader stock market.
Stock losses escalated through the afternoon session with the S&P 500 closing at mid-December levels, down 1.8%, and suffering its first four-day losing streak in 13 months. The Dow Jones Industrial Average tanked 331 points, or 1.9%, and the Nasdaq dropped 1.6%.
Crude has been under immense downward pressure as major global oil suppliers face a standoff in who will cut production levels first to address weakening demand. West Texas Intermediate, currently more than half its mid-summer peak, tanked 5.4% over the session to a fresh 5 ½-year low of $49.87.
"This is the oil market's version of Newton's third law of market, with a market in motion tending to stay in motion unless acted upon by an outside force," Citi's Timothy Evans wrote in a report.
Extending losses on Monday, Russia reported oil production at a post-Soviet record and Iraq saw its highest oil exports since 1980. On the flipside, the U.S. dollar surged and gold added 1.7% to $1,207.20 an ounce.
"The price of gold is higher and price of oil is down significantly. That's an unusual combination," said James Abate, chief information officer of Centre Funds, in a call. "What it signifiies to me is the fact that, contrary to the expected broad-based positive stimulative benefits to the consumer portion of the economy, the continuing sharp collapse in oil prices is indicative of an economic slowdown due to falling demand."
The energy sector led stock losses, with the Energy Select Sector SPDR ETF (XLE) down more than 4.1%. Large-cap oil companies Exxon Mobil (XOM) , Royal Dutch Shell (RDS.A) , Chevron (CVX) and BP (BP) plummeted, while small-cap oilers including Precision Drilling (PDS) , Halcon Resources (HK) and Oasis Petroleum (OAS) suffered some of the largest losses.
"The old phrase in energy is that the best cure for low prices is low prices. The only question is how it long it takes before the supply boom begins to dissipate," said S&P Capital IQ analyst Stewart Glickman in an email. "All of the capex that went into new wells in the last few years is generating incremental production growth."
The healthcare sector, though caught up in the broader selloff, managed to show some bright spots. Biopharmaceutical companies, in particular, were notably higher. Small-cap Cempra (CEMP) surged 7.3% on positive clinical trial results for its oral antibiotic treatment solithromycin, while larger companies Gilead Sciences (GILD) and Merck (MRK) climbed more than 1%.
Automakers sold off after reporting mixed sales for December. Ford (F) plummeted 3.9% as December sales increased 1.3%, below consensus that called for a 2.8% jump. General Motors (GM) countered fears its massive recalls would undercut sales, posting a 19.3% increase in vehicles sold, higher than a 13% estimate. But shares followed the auto sector lower, losing 1.5%. Honda (HMC) and Fiat Chrysler (FCAU) reported monthly sales below estimates, sending shares lower.
Analysts' actions also moved markets. Caterpillar (CAT) , the Dow's biggest loser, lost more than 5% on a downgrade to "underweight" from JPMorgan analysts. The revision was due to the construction equipment company's exposure to mining and oil markets.
Starbucks (SBUX) dumped 1.7% after Janney Montgomery downgraded to "neutral," arguing it likely faces difficulty in accelerating comparable-store growth.
-- Written by Keris Alison Lahiff in New York.