Oil prices plunge 6% as stocks give up gains and sink

Wall Street kicks off the second week of 2016 on edge, as oil prices plunged even further and stocks continue to drop after suffering the market’s worst start to a year ever last week. Stocks initially shrugged off more turbulence in the mainland China stock market overnight, where shares plunged 5.3% after last week’s 10% drubbing on growth fears, and jumped at the open only to see the gains evaporate later in the morning.635537951629891777-AP-Norway-Satoil-Arctic-Drilling

The Dow Jones industrial average was down 60 points, or 0.4%, in afternoon trading after being up as much as 115 points. The broader Standard & Poor’s 500 stock index slid 0.8% as the broad-based index fell into correction territory. The Nasdaq composite index gave up a 40-point gain and was down about 50 points, or 1.2%. The energy sector once again led the market lower as oil prices tumbled further, falling below $31 a  barrel. U.S. crude fell 6.5% to $30.96 a barrel.

The main problem haunting Wall Street and global markets is the specter of a slowing economy in China, the world’s second-biggest economy which has been a major driver of global growth in recent years. Investors are still hoping the U.S. stock market can eventually stabilize after a horrific start to the year last week, when the Dow tumbled 6.2%, the Standard & Poor’s 500 fell 6% and the broad market, as measured by the Wilshire 5000 Total Market Index, suffered a paper loss of $1.5 trillion.

But Wall Street pros stress that a rapid rebound likely won’t occur, even though a relief rally at some point could materialize due to the extreme oversold nature of the market. Ari Wald, a technical analyst at Oppenheimer, who correctly called a correction in the first quarter of this year, says “caution remains warranted.” “The key message is more time is needed before the strength can be sustained,” he told clients in a note ahead of today’s opening bell. Wall Street will also be watching the start of the fourth-quarter earnings reporting season, which unofficially kicks off after today’s closing bell with a report from aluminum maker Alcoa. Like the past two quarters, analysts are projecting negative growth for the quarter. Shares in Europe were mixed as the Stoxx Europe 600, a broad European stock gauge that tumbled 6.7% last week, was down 0.1%.