Another drop in the price of oil rattled stock investors around the world on Friday, with steep losses in Europe and the U.S., where a major market index ended its worst week since the summer.
The selling in the U.S. was broad, with all 10 sectors of the Standard and Poor's 500 index ending down. Oil and gas companies lost the most. Southwestern Energy plunged 14 percent and Chesapeake Energy sank 9 percent.
Investors sought refuge in bonds. Treasury prices rose, sending yields lower. Another measure of anxiety, the so-called Vix index, jumped. It is now up 70 percent in just five days.
Investors worry the sharp fall in the price of oil and other commodities is a sign of weakness in the global economy, especially China, and that will cut into profits at big energy producers and suppliers of raw materials as well as other companies.
"We're stockpiling commodities and demand is not picking up," said Tim Courtney, chief investment officer of Exencial Wealth Advisors. "It's kind of a depressing market."
Investors are looking ahead to a Federal Reserve meeting next week where the central bank is widely expected to announce an increase in its benchmark interest rate from a record low.
Recent economic reports indicate that the U.S. economy is healthy enough to withstand a rate hike, but investors are still nervous because it would be the first rate rise in nearly a decade.
Investors are also focusing on a batch of reports illuminating the state of China's economy, which has been struggling with a stubborn slowdown in growth.
Statistics released in Beijing on Saturday provided reasons for optimism as China's retail sales in November rose 11.2 percent from the prior year, the largest jump of 2015. Factory output increased 6.2 percent in November, the biggest gain since June. But real estate investment remained weak, edging up just 1.3 percent during the first 11 months of the year.
China's government is scheduled to release another key report on foreign direct investment Wednesday.
The trouble on Friday began with a report from the International Energy Agency that said the oversupply in oil would persist until late next year even as demand continues to weaken. Benchmark U.S. crude plunged $1.14, or 3 percent, to close at $35.62 a barrel in New York. It has been falling for 1 ½ years and is now at its lowest level since early 2009.
By the end of the day, the S&P 500 index had lost 39.86 points, or 1.9 percent, to 2,012.37. It was down 3.8 percent for the week, its worst showing since August.
The Dow Jones industrial average lost 309.54 points, or 1.8 percent, to 17,265.21. The Nasdaq composite declined 111.71 points, or 2.2 percent, to 4,933.47.
In Europe, Germany's DAX lost 2.4 percent, Britain's FTSE 100 dropped 2.2 percent and France's CAC 40 shed 1.8 percent.
Investors were also rattled by trouble in a risky corner of the credit markets where bonds from heavily indebted companies are traded. Their prices have fallen sharply as investors fear the companies that issued the bonds might default. A fund that tracks the bonds, the iShares iBoxx USD High Yield Corporate Bond ETF, has dropped nearly 4 percent in five days.
"It's anticipation of the Fed, it's oil, it's credit ... all of these factors are putting fear and confusion into the investor," said Jonathan D. Corpina, senior managing partner at Meridian Equity Partners.
In a sign of trouble among commodity producers, Dow Chemical and DuPont on Friday announced a $130 billion deal to merge their businesses to counter falling prices. Their stocks had risen in previous days on reports the deal was forthcoming, but fell sharply on Friday.
Dow Chemical dropped $1.54, or nearly 3 percent, to $53.37. DuPont lost $4.11, or 5.5 percent, to $70.44.
In Asia, Japan's Nikkei 225 index climbed 1 percent, but most other major indexes fell. Hong Kong's Hang Seng dropped 1.1 percent and mainland China's Shanghai Composite lost 0.6 percent.
Among stocks making big moves:
— Software maker Adobe Systems rose $2.46, or 2.8 percent, to $91.42 after reporting earnings in its latest quarter that exceeded analysts' expectations. The stock is up 26 percent since the start of the year.
— Corning rose 99 cents, or 5.6 percent, to $18.68 after the company said it will give up its stake in Dow Corning, a joint venture with Dow Chemical. Instead it will invest in a semiconductor business that is owned by Dow Corning.
U.S. government bond prices rose sharply. The yield on the 10-year Treasury note fell to 2.12 percent from 2.23 percent late Thursday, a big move. The dollar fell to 120.79 yen from 121.64 yen. The euro strengthened to $1.0995 from $1.0939.
Precious and industrial metals futures closed mixed. Gold edged up $3.70 to $1,075.70 an ounce, silver fell 23 cents to $13.88 an ounce and copper rose four cents to $2.12 a pound.
In other energy futures market, Brent crude, the international oil benchmark, fell $1.80, or 4.5 percent, to $37.93 a barrel in London. In New York, heating oil plunged eight cents, or 6.5 percent, to $1.146 a gallon, wholesale gasoline was little changed at $1.282 a gallon, and natural gas lost 2.5 cents, or 1.2 percent, to $1.99 per 1,000 cubic feet.
AP Markets Writer Marley Jay contributed to this report.