Stocks cap worst month in 2 years

U.S. stocks sank again Wednesday and cemented February as the worst month for the market in two years.

Not only was the month’s loss sharp, at 3.9% for the Standard & Poor’s 500 index, but it was also the first in a long time. S&P 500 index funds snapped a record-setting run of making money for 15 straight months, including dividends.

Some of Wednesday’s drop was due to a slide in the price of oil, which sent energy stocks to the market’s sharpest losses.

The dominant fear for the month was the threat of higher inflation and interest rates. Concerns got so high that the S&P 500 spiraled down 10% in just nine days at one point, before trimming some of its losses. The index had five losses of 1% or more in February, more than it did in all of last year.

Expect even more swings in coming weeks and months, said Brian Peery, portfolio manager at Hennessy Funds. Investors are trying to figure out how many times the Federal Reserve will raise interest rates this year in the face of a growing economy. Uncertainty is high given that markets are waiting to see how much Washington’s recently passed tax cuts will push companies to spend on equipment and wages.

On Wednesday, the yield on the 10-year Treasury fell to 2.86% from 2.90% late Tuesday.

The benchmark yield relinquished roughly all of its increase from the prior day, when comments from Fed Chairman Jerome Powell once again raised speculation of a more aggressive Fed. He told Congress that he’s more optimistic about the economy, which led some investors to anticipate four rate increases for 2018, up from three last year.

Among the biggest losers Wednesday in the S&P 500 was Lowe’s, which reported weaker profit for the last quarter than analysts expected. The home-improvement chain’s stock dropped $6.20, or 6.5%, to $89.59.

Energy stocks in the S&P 500 lost 2.3%, the steepest drop among the 11 sectors that make up the index. They were hurt by a sharp decline in the price of oil after a government report showed that U.S. oil inventories rose more than analysts expected last week.

Benchmark U.S. crude lost $1.37 to settle at $61.64 per barrel. Brent crude, the international standard, fell 85 cents to $65.78 per barrel.

The dollar dipped to 106.66 Japanese yen from 107.42 yen late Tuesday. The euro fell to $1.2203 from $1.2236, and the British pound slipped to $1.3771 from $1.3916.

In commodities markets, gold slipped 70 cents to $1,317.90 per ounce, silver lost 3 cents to $16.41 per ounce and copper dropped 5 cents to $3.13 per pound.