U.S. stocks extended their selloff in early afternoon trading on Tuesday as falling oil prices heightened concerns regarding the health of the global economy and investors sought safer investments.
Brent oil fell nearly 6 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 fell 2.4 percent after the oil major reported its smallest quarterly profit in more than a decade. Chevron also fell 3.3 percent. The stocks 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, tepid U.S. economic data and the pace of rate hikes by the Federal Reserve. The S&P 500 has fallen more than 5 percent this year.
"Investors have been looking at the data and while the data has been good, it hasn't been great and investors 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, down from 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.
Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey, said the Iowa election results created greater uncertainty for investors because there were no clear winners.
"The bottom line for people who are investing is they prefer a little more certainty than they are seeing right now in either the election or in the energy markets."
At 12:46 a.m. ET (1746 GMT) the Dow Jones industrial average was down 245.93 points, or 1.5 percent, at 16,203.25, the S&P 500 was down 28.24 points, or 1.46 percent, at 1,911.14 and the Nasdaq Composite index was down 66.32 points, or 1.44 percent, at 4,554.05.
All 10 major S&P sectors were lower with the energy index's 2.59 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 3.6 percent at $798.45 after the internet giant's quarterly profit beat estimates. Alphabet surpassed Apple as the most valuable U.S. company. Apple was down 1.2 percent at $95.24.
Michael Kors was up 22.2 percent at $49.39 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.
Royal Caribbean Cruises fell 16.2 percent after it forecast a current-quarter profit below expectations.
Declining issues outnumbered advancing ones on the NYSE by 2,460 to 541. On the Nasdaq, 2,152 issues fell and 567 advanced.
The S&P 500 index showed eight new 52-week highs and 19 new lows, while the Nasdaq recorded 16 new highs and 106 new lows.
(Reporting by Tanya Agrawal; Additional reporting by Lewis Krauskopf; Editing by Don Sebastian)
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