NEW YORK - A dismal report on retail spending in the United States and signs of slowing global growth drove stocks lower and sent yields on government bonds plunging as investors sought safety.
Stocks fell from the start of trading on a report that consumers pulled back on spending last month and on a slump in European markets. At one point, the Dow Jones industrial average shed nearly 350 points.
Investors dumped some key commodities on fears that global growth is stalling, pushing the price of copper to a five-year low, and they piled into German, British, and U.S. government bonds. The yield on the 30-year Treasury fell to its lowest on record.
"We haven't seen volatility like this for years," said John Canally, investment strategist for LPL Financial. "People are more worried."
The Commerce Department reported that retail sales fell 0.9 percent in December, the biggest decline since January last year. The drop was a surprise to many investors because it showed consumers are still reluctant to spend despite lower gas prices and a pickup in hiring.
"The savings from lower gas prices hasn't translated into higher consumer spending yet," said Peter Tuz, a portfolio manager at Chase Investment Counsel, which manages $400 million in assets.
A report from the World Bank late Tuesday also weighed on markets. The bank lowered its forecast for global growth this year to 3 percent from 3.4 percent. It blamed sluggish economies in Europe and Japan and a slowdown in China.
Investors buying up 10-year Treasury notes sent its yield, a benchmark for home loans and corporate borrowing, to 1.85 percent, its lowest since May 2013. The yield on the 30-year bond dropped below 2.4 percent for the first time.
The Standard & Poor's 500 index fell 11.76 points, 0.58 percent, to 2,011.27. The S&P 500 is heading for its third straight week of losses.
The Nasdaq composite fell 22.18 points, or 0.48 percent, to 4,639.32. And the Dow Jones industrial average dropped 186.59 points, or 1.06 percent, to 17,427.09.
The price of oil surged, despite a large increase in U.S. oil stockpiles, on a weaker dollar and traders' expectations that oil had fallen too far recently. Benchmark U.S. crude rose $2.59 to close at $48.48 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose $2.10 to close at $48.69 in London.
The price of copper fell 14 cents, or 5.2 percent, to close at $2.51 a pound following the World Bank's downgrade. Gold edged up 10 cents to $1,234.50 an ounce and silver fell 17 cents to $16.99 a pound.