NEW YORK -- Volatility surged in the U.S. equity market Tuesday as the Dow Jones industrial average erased a 282-point rally and a 143-point decline, then slipped again in the final minutes to close lower.
U.S. stocks swung between gains and losses as oil prices fluctuated near the lowest level in five years, while copper plunged. An S&P index of home builders tumbled as KB Home sank the most in 22 years after saying its first-quarter profit will miss analysts' estimates. Ocwen Financial, one of the biggest U.S. mortgage servicers, fell the most ever after a newspaper reported that California is seeking to suspend its license. Freeport-McMoRan and Newmont Mining slumped more than 3.9 percent.
The Standard & Poor's 500 index dropped 0.3 percent to 2,023.03 for a third day of losses. The Dow average lost 27.16 points, or 0.2 percent, to 17,613.68. The Russell 2000 Index of small companies gained 0.1 percent.
"Having these 200-, 300-point swings, I'm not surprised," Kevin Divney, chief investment officer at Beaconcrest Capital Management, said by telephone. "We had them on the downside, we had them on the upside. Until we have concrete earnings data in aggregate, the market will be somewhat trendless, and trendless blended with volatility is not a good environment."
The S&P 500 moved 49 points from peak to trough Tuesday, the biggest intraday swing since Oct. 15, when the benchmark gauge erased nearly all of a 3 percent decline. It has moved an average of 0.95 percent per day so far in 2015. That's almost double the average daily price change of 0.53 percent in 2014, the calmest year in U.S. stocks since 2006.
The Chicago Board Options Exchange volatility index rose 4.9 percent to 20.56, bringing its three-day advance to 21 percent.
"Certainly volatility like this doesn't make me feel too happy about the market," Paul Zemsky, the head of multi-asset strategies at Voya Investment Manage
ment, which oversees $213 billion, said by phone from New York. "There is some nervousness about earnings. We do expect earnings to be hit by the drop in oil prices."
The S&P 500 declined 0.8 percent Monday as the continuing selloff in crude pulled down energy shares. It has dropped 3.2 percent since a record in December as oil prices fell to the lowest since April 2009.
Oil rose 0.4 percent in electronic trading, after falling below $45 a barrel during regular trading amid speculation that U.S. stockpiles will increase. The U.S. benchmark dropped as much as 4.1 percent before paring losses to settle at $45.89 a barrel.
"There was an anticipation that we would stabilize in oil prices and we're really not," Jeff Sica, president and CEO of advisory firm Circle Squared Alternative Investments, which oversees $1.5 billion, said by phone. "My contention has been that we're beginning to see some very severe structural damage to the economy as oil prices continue to fall."
Housing shares slumped after KB Home said on a conference call its fiscal first-quarter gross margin will narrow significantly and that it's unlikely to meet its goal of a 20 percent margin for 2015. The stock plunged 16 percent, the most since August 1992, while an S&P homebuilder index plunged 3.2 percent, the biggest drop in a month.
D.R. Horton sank 4.8 percent and Lennar lost 1.7 percent.
Freeport sank 7.4 percent and Newmont Mining retreated 3.9 percent to lead declines in raw-materials companies. Copper fell a fifth day to the lowest in more than five years, on speculation lower energy costs will encourage mining companies to increase production.
Alcoa, the largest U.S. aluminum producer late Monday unofficially kicked off the fourth-quarter earnings season by reporting profit and sales that beat analysts' estimates. The stock slipped 2.3 percent Tuesday.
Investors will turn to bank earnings this week, as JPMorgan Chase and Citigroup are among nearly 20 S&P 500 companies to report results. Earnings at companies in the gauge probably climbed 2 percent in the final quarter of 2014, and 2.8 percent in the current period, analysts forecast. That's down from October estimates of 8.5 percent and 9.5 percent, respectively.
Ocwen Financial sank 36 percent. The Los Angeles Times reported Monday that California's Department of Business Oversight may suspend its license for a year, an action that would force Ocwen to sell its mortgage-servicing rights in the state.
Later this week, investors will also weigh economic reports, including retail sales, manufacturing in the New York region and industrial production, for clues on the health of the world's largest economy.