Wall Street stumbles as oil slumps again | Reuters - Firstpost
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Wall Street stumbles as oil slumps again | Reuters

Updated: Feb 24, 2016 03:45 IST

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Wall Street stocks slid on Tuesday, hurt by pressure from a renewed drop in oil prices, undercutting momentum that had helped the market rebound from a sluggish start to the year.

The major U.S. indexes closed down more than 1 percent. Crude prices settled down 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 3.2 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 fell 188.88 points, or 1.14 percent, to 16,431.78, the S&P 500 lost 24.23 points, or 1.25 percent, to 1,921.27 and the Nasdaq Composite dropped 67.02 points, or 1.47 percent, to 4,503.58.

In a sign of the spreading toll from low oil prices, JP Morgan, the largest U.S. bank by assets, will increase provisions for expected losses on energy loans by $500 million, or more than 60 percent of its existing reserves. Its shares dropped 4.2 percent.

Financial shares, the worst performing group this year, fell another 1.8 percent on Tuesday. Nine of the 10 S&P sectors finished negative.

After posting its strongest week of the year last week, the S&P 500 had climbed another 1.5 percent on Monday. It remains down 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 plummeted 20.8 percent to $13.08 after the wearable fitness device maker forecast profit below estimates.

Western Digital dropped 7.2 percent to $42.77 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 1.6 percent.

Declining issues outnumbered advancing ones on the NYSE by 2,075 to 991, for a 2.09-to-1 ratio on the downside; on the Nasdaq, 1,924 issues fell and 858 advanced for a 2.24-to-1 ratio favoring decliners.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq recorded 23 new highs and 52 new lows.

About 7.1 billion shares changed hands on U.S. exchanges, below the 9 billion daily average for the past 20 trading days, according to Thomson Reuters data.

(Reporting by Lewis Krauskopf and Chuck Mikolajczak in New York; Additional reporting by Abhiram Nandakumar in Bengaluru; Editing by Chizu Nomiyama and James Dalgleish)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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