Today was yet another example where Wall Street computers are programmed to do a massive sell off when a certain algorithm trips.  In this case, the trip was the S&P falling below 2,050 and this precipitated a 300 point dive in the Dow before it finally settled 75 points down at close.  This is the market priming itself for the expected interest rate hike which, if all indicators are correct, will be taking place just about this time next week.  Oil also continued to fall as it was reported that stockpiles of fuel (aka distillates) were twice as large as expected, thereby pretty much nullifying prior reports that we were having some success drawing down our massive inventories.  As we continue to get closer to next week's Fed meeting, trading remains brisk, today at over 8 billion.

Markets | Wed Dec 9, 2015 4:39pm EST

Wall St. falls in technical trade ahead of Fed rate decision

BY SINEAD CAREW

DJ:  17,492.30  -75.70       NAS:  5,022.87  -75.38        S&P:  2,047.62  -15.97

REUTERS/LUCAS JACKSON

U.S. stocks closed lower on Wednesday in a choppy session as oil resumed its decline and the S&P 500 index fell through a technical support level ahead of a Federal Reserve meeting next week that is expected to result in an interest rate hike.

After a morning rally the three major U.S. indexes fell as investors worried about slowing global economic growth, weak oil and the first U.S. rate hike in almost a decade.

Computer trading programs kicked in with a wave of selling when the S&P failed to stay above its 2,050 support level, according to Art Hogan, chief market strategist at Wunderlich Securities in New York.

"Often times investors will look at the commodity complex as a barometer for the global economy. Couple that with the fact that we broke support in the S&P 500," said Hogan.

The Dow Jones industrial average .DJI fell 75.7 points, or 0.43 percent, to 17,492.3, the S&P 500 .SPX lost 15.97 points, or 0.77 percent, to 2,047.62 and the Nasdaq Composite .IXICdropped 75.38 points, or 1.48 percent, to 5,022.87.

Investors were also getting into position ahead of an expected hike announcement by the Fed on Dec. 16.

"People are growing concerned they're going to raise rates at the worst possible time," said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

The S&P materials sector .SPLRCM was the brightest spot on Wednesday with a 3.1 percent increase driven by reports that Dow Chemical (DOW.N) and DuPont (DD.N) were in talks to merge. Dow shares finished up 11.9 percent, and Dupont rose 11.8 percent.

Crude oil LCOc1 CLc1 prices settled lower after rising as much as 4 percent as the market ignored a U.S. crude stockpile drawdown to focus on a build in distillates, including diesel, that was twice as big as expected.

The energy index .SPNY trimmed earlier gains to close up 1.3 percent after falling more than 10 percent since Dec. 1.

Investors are concerned about China's slowing economy and its impact on global demand for commodities as well as signs of weakness in U.S. manufacturing.

“I think the market is starting to be a little bit more concerned about global economic weakness,” said Paul Nolte, senior vice president and portfolio manager at Kingsview Asset Management in Chicago.

Seven of 10 major S&P 500 sectors ended down and the technology index's .SPLRCT 1.5 percent fall led the losers.

"You definitely have a risk-off situation. People took a lot of bets off the table," Andrew Frankel, co-president of Stuart Frankel & Co in New York.

Declining issues outnumbered advancing ones on the NYSE by 1,867 to 1,214, for a 1.54-to-1 ratio on the downside; on the Nasdaq, 1,932 issues fell and 866 advanced for a 2.23-to-1 ratio favoring decliners.

The S&P 500 posted eight new 52-week highs and 16 new lows; the Nasdaq recorded 28 new highs and 126 new lows.

More than 8.05 billion shares changed hands on U.S. exchanges compared with the 6.89 billion average for the last 20 sessions, according to Reuters data.