Wall Street slid on Tuesday on pressure from a renewed drop in oil prices, snapping a rally that had helped the market rebound from its sluggish start to 2016.
The major U.S. indexes were off about 1 percent. Crude prices sank more than 4 percent as Saudi Oil Minister Ali Al-Naimi effectively ruled out production cuts anytime soon.
Equity markets this year have been tightly linked to the daily fluctuations of battered oil prices. Energy shares tumbled 2.7 percent on Tuesday, leading declines among S&P sectors.
"The markets are really worried that we are missing something here – that the global slowdown may be more significant than we are recognising and that slowdown could be causing oil prices to drop, and commodities prices in general," said Tracie McMillion, head of asset allocation at Wells Fargo Private Bank in Winston-Salem, North Carolina.
The Dow Jones industrial average was falling 167.03 points, or 1 percent, at 16,453.63, the S&P 500 was losing 19.47 points, or 1 percent, at 1,926.03 and the Nasdaq Composite was dropping 48.77 points, or 1.07 percent, at 4,521.84.
In a sign of the spreading toll from low oil prices, JP Morgan, the largest U.S. bank by assets, said it would increase provisions for expected losses on bad energy loans by more than 60 percent in the first quarter. Its shares dropped 4 percent.
Financial shares, the worst performing group this year, fell another 1.6 percent on Tuesday. Nine of the 10 S&P sectors were negative.
After posting its best week of the year last week, the S&P had climbed another 1.5 percent on Monday. It remains down about 6 percent this year.
"Having the market take a little bit of profit wasn’t a surprise to us," said John Traynor, chief investment officer of People’s United Wealth Management in Bridgeport, Connecticut. "We think this is just a small setback in an ongoing recovery. We have been telling clients that we are in a bottoming process."
Fitbit sank 19.4 percent to $13.31 after the wearable fitness device maker forecast profit below estimates.
Western Digital dropped 6.5 percent to $43.12 after it cut the price of its planned acquisition of rival U.S. hard-disk maker SanDisk Corp by more than $3 billion after losing a big investment from China's Unisplendour Corp Ltd. SanDisk fell 1.5 percent.
Declining issues outnumbered advancing ones on the NYSE by 1,947 to 1,056, for a 1.84-to-1 ratio on the downside; on the Nasdaq, 1,709 issues fell and 998 advanced for a 1.71-to-1 ratio favoring decliners.
The S&P 500 posted 9 new 52-week highs and no new lows; the Nasdaq recorded 22 new highs and 37 new lows.
(Reporting by Lewis Krauskopf and Chuck Mikolajczak in New York; additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Saumyadeb Chakrabarty and Chizu Nomiyama)
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First Published On : Feb 24, 2016 01:45 IST