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As oil continues selloff, Wall Street stumbles

Traders work the floor of the New York Stock Exchange in New York, January 27, 2016. REUTERS/Brendan McDermid

Wall Street was sharply lower on Tuesday as falling oil prices heightened concerns regarding the health of the global economy and investors sought safer investments. 

Brent oil fell more than 5 percent, while U.S. crude briefly slid below $30 per barrel, as hopes for a deal between OPEC and Russia on output cuts faded.

Shares of Exxon <XOM.N> fell 3 percent after the oil major reported its smallest quarterly profit in more than a decade. The stock weighed the most on the S&P energy index.

"We still haven't broken the correlation between oil and equities and we are yet to find a bottom in oil prices," said Jeff Carbone, co-founder of Cornerstone Financial Partners in Charlotte, North Carolina.

Carbone said consumer savings from cheap gasoline have failed to translate into higher spending as U.S. consumers opt to pay down debt rather than buy big-ticket items.

Investors have been concerned about a China-led global economic slowdown and the pace of rate hikes by the U.S. Federal Reserve. The S&P 500 has fallen more than 5 percent this year.

"Investors have been looking at data and while the data has been good, it hasn't been great as they remain concentrated on the negative news."

The focus now shifts to the January employment numbers due this week. Despite the strong labor market, traders are factoring in only one rate hike this year, not four as earlier estimated.

Investors are also keeping an eye on the U.S. election cycle, with Senator Ted Cruz winning the Republican caucus in Iowa on Monday and Democrat Hillary Clinton narrowly edging out Senator Bernie Sanders.

Scott Clemons, chief investment strategist at Brown Brothers Harriman in New York, said the market will take note as specific policy proposals firm up during the campaign.

At 11:11 a.m. ET the Dow Jones industrial average was down 249.32 points, or 1.52 percent, at 16,199.86, the S&P 500 <.SPX> was down 26.8 points, or 1.38 percent, at 1,912.58 and the Nasdaq Composite index <.IXIC> was down 55.45 points, or 1.2 percent, at 4,564.92.

All 10 major S&P sectors were lower with the energy index's 2.32 percent loss leading the decliners.

With fourth-quarter earnings underway, S&P 500 earnings are expected to have fallen 4.4 percent from a year earlier, according to Thomson Reuters data.

Big names such as Yahoo and Chipotle are scheduled to report results after the close of market.

Alphabet was up 4.7 percent at $806.83 after the internet giant's quarterly profit beat estimates. Alphabet surpassed Apple as the most valuable U.S. company. Apple was down 0.9 percent at $95.46.

Michael Kors was up 18.4 percent at $47.89 after the handbag and accessories maker reported a smaller-than-expected decline in quarterly sales.

Mattel was up 12.4 percent at $30.04 after the toy maker reported a surprise rise in quarterly net sales, its first increase in over two years.

Declining issues outnumbered advancing ones on the NYSE by 2,472 to 491. On the Nasdaq, 2,072 issues fell and 553 advanced.

The S&P 500 index showed seven new 52-week highs and 15 new lows, while the Nasdaq recorded 16 new highs and 73 new lows.