Energy firms lead stocks lower after oil price plunge

The steepest drop in oil prices in more than three years put investors in a selling mood Tuesday, extending a losing streak for the S&P 500 index to a fourth day.

Energy stocks led a late-afternoon sell-off on Wall Street after the price of U.S. crude oil plunged 7.1 percent to $55.69 a barrel, the lowest level since December 2017.

Oil has now fallen for 12 straight days, driven by worries over rising oil production around the world and weakening demand from developing countries.

“You have fears associated with the drop in the price of oil probably moving into the equity market,” said Willie Delwiche, investment strategist at Baird. “There’s a knee-jerk reaction when you see oil down that it signals economic weakness.”

The S&P 500 index fell 4.04 points, or 0.1 percent, to 2,722.18. The Dow Jones Industrial Average lost 100.69 points, or 0.4 percent, to 25,286.49, half of which was attributable to a drop in Boeing.

The Nasdaq composite was little changed at 7,200.87. The Russell 2000 index of smaller companies gave up 3.99 points, or 0.3 percent, to 1,514.80.

Oil prices have been declining as the market adjusts to a drop in demand from emerging markets coupled with expectations for increased supply from the U.S. and OPEC.

“It’s very possible for oil to continue to shoot in either direction until you get that equilibrium,” said Tom Hainlin, global investment strategist at U.S. Bank Wealth Management.

President Donald Trump has been pressing Saudi Arabia and OPEC not to cut production. Saudi Arabia said this week that the oil cartel and allied crude producers will likely need to cut supplies, perhaps by as much as 1 million barrels a day.

OPEC estimated that production increases from Saudi Arabia, United Arab Emirates and Russia, have made up for more than twice the loss of production out of Iran, according to Ritterbusch and Associates, an oil trading advisory firm.

The firm expects that U.S. crude oil will continue to decline to about $55.25 a barrel.

Tuesday’s slide in oil prices weighed on energy sector stocks. Halliburton dropped 5.5 percent to $32.27.

RICHARD DREW — THE ASSOCIATED PRESS FILE Trader Thomas Ferrigno, right, and specialist Gregg Maloney work on the floor of the New York Stock Exchange.