Stocks traded at session lows Tuesday afternoon as a sharp selloff in crude oil punished the energy sector.
The S&P 500 was down 1.4%, the Dow Jones Industrial Average declined 1.3%, and the Nasdaq fell 1.2%. Losses have more than doubled since market open. The CBOE Volatility Index (VIX.X) , commonly known as the 'fear index,' has risen nearly 50% since Friday's selloff.
Crude oil moved lower on Tuesday after the International Energy Agency said global demand growth was slowing by more than previously thought and predicted the slowdown would continue in 2017. The agency expects global demand to increase by 1.3 million barrels a day this year, 100,000 barrels slower than previously forecast.
"Recent pillars of demand growth -- China and India -- are wobbling," the IEA said in its monthly report. "After more than a year with oil hovering around $50 a barrel, the [economic] stimulus from cheaper fuel is fading."
West Texas Intermediate crude fell 3% to $44.90 a barrel on Tuesday.
"The weakness in oil is translating into equity market weakness and U.S. dollar strength, further undermining oil market sentiment in turn," said Tim Evans, energy futures analyst at Citi. "It's a risk-off trade day."
Energy stocks were the worst performers on markets Tuesday. Exxon Mobil (XOM) , Shell (RDS.A) , Total (TOT) , BP (BP) and Petrobras (PBR) were all sharply lower, while the Energy Select Sector SPDR ETF (XLE) slid 2.6%.