Wall Street's worst-ever start to a year isn't getting any better.

On Wednesday, benchmark indexes plunged, echoing a global rout that came as oil continued to cave, dropping to a 12-year low.

"Negativity is driving the markets in 2016," said Nick Raich, CEO at the Earnings Scout. "Some of the selloff has been justified, stock prices are resetting to reflect lower growth expectations."

After a 565-point drop, the Dow Jones Industrial Average (DJIA) at 3:45 p.m. ET was off 182 points, or 1.1 percent, at 15,834. The S&P 500 (SPX) declined 14 points, or 0.7 percent, to 1,868. Erasing losses, the Nasdaq Composite (COMP) rose 11 points, or 0.2 percent, to 4,486.

Get Breaking News Delivered to Your Inbox

Energy weighed the most among the S&P 500's 10 major sectors, all but one of which were in the red.

"Data justify a correction, not necessarily a bear market," said Raich of economic reports, which on Wednesday had the cost of living in the U.S. falling in the final month of 2015.

A separate report illustrated an unexpected December decline in new-home construction.

IBM (IBM) shares lost ground, falling 5.6 percent to $121.00 a share, after the technology giant's 2016 earnings outlook came in below projections.

On the New York Mercantile Exchange, crude futures dropped 6.7 percent to $26.55 a barrel.

Investors fled to perceived safe-havens including gold and U.S. Treasury bonds, with with gold futures up 1.3 percent at $1,103.50 an ounce and the 10-year Treasury yield sliding under 2 percent.

Capital Economics in a note called the selloff overdone, saying the outlook for the U.S. economy is "reasonably bright." The research firm expects global growth of 3 percent this year, up from 2.5 percent in 2015. "Employment growth is likely to remain strong, causing the unemployment rate to fall below 5 percent," Capital Economics predicted. "This in turn should support consumption growth and prompt wage inflation to pick up later this year."