U.S. stocks tumbled on Wednesday, with the Dow Jones Industrial Average plunging more than 260 points, after the Organization of the Petroleum Exporting Countries (OPEC) slashed its outlook for 2015, sending the price of crude oil to a new five-year low.

The S&P 500 energy sector dropped more than 3 percent, led by declines from Chevron Corporation and Halliburton Company, which lost just over 2 percent and 3.49 percent, respectively. "Overseas demand in crumbling because the global economy is lackluster at best," Adam Sarhan, founder and chief executive officer of Sarhan Capital, said to IBTimes. The jitters in the U.S. stock market are a combination of several concurrent factors that are causing investors to sell their stocks and not buy ahead of the end of the year, including new stimulus measures in Europe, China and Japan, geopolitical concerns in Russia and fears regarding how strong the fourth quarter is going to be in the U.S., Sarhan said.

Global benchmark Brent crude dropped 3.52 percent on Wednesday following the OPEC report, to $64.49 a barrel on the London ICE Futures Exchange. Meanwhile, West Texas Intermediate crude (WTI), the benchmark for U.S. oil prices, declined 4.12 percent to $61.19 for January delivery on the New York Mercantile Exchange, lowest since July 2009. 

“Major declines in oil prices have often corresponded with impressive strength in equity markets,” Piper Jaffray’s Managing Director Craig Johnson and Research Analyst Leah Williams said in the firm’s “Outlook 2015: Bulls are Rockin' in the Free World” report. The only exceptions are 2001 and 2008, when there were major bear markets across all asset classes. “Major sell-offs in oil prices have never killed bull markets, but reinforced them with further strength. Since 1985, with the exception of 2001, an economic recession has never unfolded after a massive sell-off in oil prices,” Johnson and Williams said.

OPEC reduced its estimate of next year's production on Wednesday to 28.9 million barrels a day, or roughly 300,000 fewer barrels than previously forecast. But OPEC said in its monthly oil market report that its outlook for global economic growth in 2014 and 2015 remained unchanged from the previous month at 3.2 percent and 3.6 percent, respectively. 

“We see OPEC cutting production in the first quarter of 2015 in an attempt to halt the oil price slide. A cut in OPEC production could potentially send prices back to the $70 range, reflecting world demand,” Peter Cardillo, chief market economist at Rockwell Global Capital, said in a research note.

Ahead on Thursday’s economic calendar, the U.S. Census Bureau is scheduled to release its monthly retail sales report for November at 8:30 a.m. EST, which economists view as a key economic indicator since consumer spending accounts for nearly two-thirds, or 75 percent, of the U.S. economy. Following mixed reviews of Black Friday and Thanksgiving Weekend sales, economists expect retail sales to increase 0.3 percent last month, unchanged from October, according to analysts polled by Thomson Reuters. Retail sales, excluding motor vehicle and parts, which are considered to be volatile, are forecast to decline 0.2 percent last month from 0.3 percent in October.

"If we do get a down swing in the retail sales report, it wouldn't be a surprise if stocks rally because that could mean the Fed may wait to raise rates," Sarhan said. Most economists expect the Federal Reserve will hike interest rates in the middle of 2015.

The Dow Jones Industrial Average, which measures 30 large industrial stocks, dropped 268.05 points, or 1.51 percent, to finish at 17,533.15; the S&P 500 stock index, which tracks the share prices of the nation's 500 largest publicly traded companies, fell 33.68 points, or 1.64 percent, to end at 2,026.14. The Nasdaq Composite lost 82.44 points, or 1.73 percent, to finish at 4,684.03.