Stocks sink to worst monthly decline since 2016

U.S. stocks tumbled in afternoon trading, adding to the worst month for equities in two years, while Treasuries climbed with the dollar.

The S&P 500 Index dropped more than 1 percent, ending February with a decline of 3.9 percent in one of the wildest months in years. After a torrid January, the stock market sank into a recession a week later, only to claw back half of the rout just as quickly. Trading was heavier than normal Wednesday, with shares swinging between gains and losses for much of the day.

“February finally cracked the volatility genie out of the bottle, and now the big question is: will he stay out for good?” Ryan Detrick, senior market strategist at LPL Financial, wrote in a note to clients Wednesday. “The good news is that March kicks off two of the strongest months historically for equities, before we hit a period of seasonal weakness from May through October.”

The 10-year Treasury yield held just below 2.9 percent, roughly where it began a month that saw it fall as low as 2.70 and come within five basis points of 3 percent, a level it hasn’t touched in four years. The dollar added to its monthly gain, strengthening versus major peers including the euro and pound. Crude plunged after an unexpectedly strong rise in inventories.

Equities continued to fall one day after major indexes tanked based on a generally upbeat assessment of the U.S. economy from Federal Reserve Chairman Jerome Powell. His comments left investors wondering if the central bank planned more interest rate hikes than expected in 2018.

“We saw the treasury market catch a little bid here off of Powell’s comments,” said Sean Simko, head of fixed-income portfolio management at SEI Investments Co.