LOS ANGELES — The Dow Jones industrial average plunged a record 1,175 points, or 4.6 percent, on Monday as a sell-off in the stock market gained momentum less than two weeks after the market set record highs.
The percentage drop in the Dow, the famed average of 30-blue chip stocks, was well below its record single-day drop of 22.6 percent set Oct. 19, 1987, because stock prices have soared in the decades since then.
There was no discounting the damage Friday and again Monday. The Dow has now tumbled 8.5 percent since reaching a record high Jan. 26, wiping out its gains so far this year.
Although Wall Street is increasingly concerned about rising interest rates, there was no major news Monday that sparked the latest drop and, early in the session, the market tried to rally from its big setback Friday, when the Dow tumbled 666 points, or 2.5 percent.
But when the rally fizzled, investor confidence in current stock prices quickly turned sour again. And with the market still sitting on major gains for the last 12 months, investors effectively threw in the towel for at least one day and resumed heavy selling to cash in their profits. The Dow at one stage was down nearly 1,600 points.
“No one was willing to try to catch a falling knife,” A.C. Moore, chief investment strategist at Dunvegan Associates Inc. in Santa Barbara, Calif., said of the market’s downward momentum.
The Dow lost 1,175.21 points to 24,345.75, easily breaking its previous record point decline of 777.68 points set Sept. 29, 2008, during the nation’s financial crisis, which at that time amounted to a 6.98 percent decline.
The percentage drop this time was smaller because stocks have been in a bull market during the nine years since then.
Last year alone, the Dow Jones industrials soared 25.1 percent and the benchmark Standard &Poor’s index gained 19.4 percent; The S&P 500 jumped an additional 7.5 percent just last month. The Dow, S&P 500 and the tech-heavy Nasdaq composite index all set record highs Jan. 26.
The market has been propelled mainly by low interest rates, rising corporate earnings and economic growth both in the United States and abroad.
In light of those gains, analysts had warned that the stock market probably would be more volatile in 2018 because prices simply can’t keep climbing without interruption.
On Monday, the S&P 500 fell 113.19 points, or 4.1 percent, to 2,648.94, and the Nasdaq composite lost 273.42 points, or 3.8 percent, to 6,967.53.
The economic underpinnings continue to be favorable for stocks, even if interest rates keep edging up, but the stock market was poised for a “correction,” or pullback in prices, analysts said.
“We had come such a long distance in such a relatively short period of time that, by almost any measure, the market was overbought,” said John Bollinger, head of Bollinger Capital Management in Redondo Beach, Calif. “It just means the market had come too far too fast and that was unsustainable,” he said.