Stocks Hammered: Energy Slides, Tech Tumbles And Banks Take A Beating

Stocks were reeling again Monday, as technology and energy shares paced steep declines in U.S. markets alongside the latest fall in crude oil and a further flight into the supposed safety of Treasuries.

The major averages dropped more than 2%, with the Dow Jones industrial average shedding 375 points to 15,829. The S&P 500 fell to 1,832, down 48 points.

Energy was easily the hardest hit sector, with bankruptcy worries lopping 50% off Chesapeake Energy shares before the company issued a terse statement batting away rumors it was preparing a filing.

Apple's sliding stock held up better than most in the tumbling technology sector, where former high-flier Facebook was taking it on the chin.

Banks were faring no better, with the biggest in the U.S. falling sharply Monday. Goldman Sachs Group  was the Dow's worst performer with a 6% loss, while JPMorgan Chase was off more than 3%. Major financial institutions are trading below book value, indicating investors are questioning their ability to earn above their cost of capital or don't believe the reported value of the assets and loans on their books. (See "Will Investors Beat Bernie To Breaking Up Banks?")

JPM Price to Book Value data by YCharts

J.P. Morgan's global equity research team warned clients not to step in front of the southbound stock train in a note Monday, even if bottom-fishing feels tempting.

More than 40% of the stocks in the S&P 500 are at least 20% below their highs, J.P. Morgan notes, but any relief rallies likely won't last. "[I]n '11, this ratio was as high as 60% and that was even without a recession materializing," writes J.P. Morgan's Mislav Matejka. "In '08, the ratio rocketed to 95%, more than double current levels."

The stabilization that would signal a market bottom is nowhere to be seen, the firm notes, a sentiment shared by Raymond James' chief investment strategist Jeff Saut.

Saut points out "boogiemen" like Deutsche Bank's dive below its 2008 lows and the bloodbath in tech stocks that has cut names like Tableau Software in half. He thinks the "selling stampede" may be winding down, but wants to see a sustained rally before declaring it over. "We need three or more consecutive positive sessions before the 'all clear' bell is sounded," Saut writes.

Goldman Sachs' David Kostin offered at least a minor reason for optimism in his weekly kickstart note, pointing out that the wind-down of fourth-quarter earnings season means corporate buybacks should resume in the weeks ahead.

"A flood of new authorizations have boosted the already ample store of 'dry powder' for buybacks in 2016," Kostin writes, pointing to $60 billion of new program announcements year-to-date. That's great if management teams see this year's market weakness as a reason to buy shares at cheaper prices than they did last year, but not so great if they get just as skittish as investors.

Buybacks and M&A have been the greatest source of demand for U.S. stocks since 2010. "We expect this pattern will repeat in 2016," Goldman says. Among the companies that could benefit are those that have returned the most capital (on a percentage basis) to shareholders over the trailing four quarters. Firms like American International Group , Macy's , Lowe's Cos , Valero Energy , CVS Health , Pfizer , Gilead Sciences and Northrop Grumman are among those that stand to benefit if shareholders seek the security of capital return.

There was little reason to think anything like that was happening Monday. The 10-year Treasury yield dropped to 1.74%, crude oil fell back below $30 a barrel and so-called "safety stocks" were holding up better than most, but in the red. Utilities were the best-performing sector, down only about 1%, while telecom giants AT&T and Verizon Communications posted modest losses.

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