The S&P 500 was down 2.5%, the Dow Jones Industrial Average slid 2.3%, and the Nasdaq fell 3.4%.

"The market is extremely bearish right now," Craig Erlam, senior market analyst at Oanda, told TheStreet. "U.S. stocks are going to have a rough ride in the first quarter and oil is, of course, in for more shocks ... Risk appetite is going to be fairly low for the first few months of the year."

An unexpected build in crude inventories ruined a rebound on commodity markets. West Texas Intermediate crude oil closed just 0.1% to $30.47 a barrel after rallying more than 3% Wednesday morning. Crude oil stocks increased by 200,000 barrels in the week ended Jan. 8, according to the Energy Information Administration.

Crude prices fell briefly below $30 on Tuesday for the first time since December 2003. Commodities have been testing new 12-year lows in the past week as oversupply concerns persisted.

"The fundamentals are strongly against oil at this stage and we're still seeing this oversupply story," added Erlam. "Even if we see production in the U.S. drop off further, it's only slightly below the highest level we had in the middle of last year."

Energy stocks were among the worst performers on markets as investors prepared for further downside to commodity prices. Williams Cos. (WMB ) , Energy Transfer Equity (ETE) , Tesoro (TSO)  and NGL Energy Partners (NGL) were some of the biggest losers, while the Energy Select Sector SPDR ETF (XLE) tumbled 3.2%. 

High-momentum tech names were also sharply lower, led by losses in Amazon (AMZN) and Netflix (NFLX) . Microsoft (MSFT) , Oracle (ORCL) , Baidu (BIDU) and Intel (INTC) were also lower, while the Technology Select Sector SPDR ETF (XLK) fell 2.4%. 

The U.S. economy continued to grow at a modest pace, according to the latest "Beige Book" released by the Federal Reserve. The Beige Book, an anecdotal collection of conditions in the 12 Fed districts, noted growth in consumer and housing sectors, while manufacturing, agricultural and energy sectors continued to lag. 

Stocks opened higher Wednesday after Chinese exports rose, the first piece of good news out of the world's second-largest economy in some time. Chinese exports posted a surprise 2.3% increase in December as a weakening yuan boosted demand in the sector. Economists had expected a 4.1% decline. The increase in exports was the first since June with the sector under pressure from weaker demand and falling commodity prices. 

U.S. stocks suffered their worst first week to a year in history last week as fears over Chinese economic weakness spooked Wall Street and global markets. China's Shanghai Composite fell more than 10% last week.

General Electric (GE - Get Report) will reportedly cut 6,500 jobs, 600 in the U.K., following its acquisition of Alstom's power business. GE acquired the energy business of France's Alstom last year for $9.2 billion. Shares were slightly higher.

Separately, GE confirmed plans to move its global headquarters to Boston. The company said it will see no material financial impact from its move from Fairfield, Connecticut. 

Ford (F - Get Report) shares fell 5.3% despite expectations of record pretax profit in 2015. The company also declared a supplemental dividend of $1 billion to be paid to shareholders alongside its regular dividend. The automaker said it had decided to reward shareholders after six consecutive years of strong results.

General Motors (GM - Get Report) jumped 2.5% after boosting its 2016 profit outlook and hiking its quarterly dividend by 6%. The automaker expects full-year adjusted profit between $5.25 and $5.75 a share, up from previous guidance of $5 to $5.50. The board also authorized a new stock repurchase program worth $9 billion through 2017.

MetLife (MET - Get Report) jumped after announcing plans to sell or spin off its U.S. retail business into a separate entity. The insurance company said it believes the independent new U.S. life insurance company would compete more effectively and allow MetLife to benefit from reduced capital requirements. It said the potential stand-alone business would have about $240 billion in total assets and represent about 20% of its operating earnings.

Yum! Brands (YUM - Get Report) shares climbed 1.4% after the company reported healthy growth in its China business after more than a year of fallout from a health scare at its KFC restaurants. Same-store sales in December grew 1% in China, reversing a 3% decline a month earlier.

CSX (CSX) was 3.7% lower after missing sales estimates in its fourth quarter. The railroad company generated sales of $2.78 billion, below forecasts of $2.82 billion. CSX has faced slowing growth as a drop in commodity prices lowered coal delivery volumes.

Microsoft (MSFT) added 2.4% after Morgan Stanley upgraded the stock to overweight from equal weight. Analysts said Microsoft's growing position in the cloud computing market would contribute to the company's overall strength.

American Express (AXP) was downgraded to neutral from buy at Goldman Sachs. Analysts said the credit-card company's quarterly results would likely remain volatile and that its financial performance lacks near-term visibility.