Surging oil prices sent US stocks into a tailspin on Wednesday, knocking the S&P 500 below its March lows for the first time and sending the Dow Jones Industrial Average scuttling into bear market territory - down 20 per cent from its recent peak.

The benchmark S&P 500 wobbled between gains and losses but closed the day 1.8 per cent lower at 1,261.53 points - its lowest level since July 2006.