Drop in oil prices sends stocks down

Crude declines for 12th straight session; S&P 500 dips for fourth

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 about 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 kneejerk reaction when you see oil down that it signals economic weakness.”

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

STOCKS ‘It’s

very possible for oil to continue to shoot in either direction until you get that equilibrium.

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 has adjusted to a drop in demand from emerging markets and 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, the 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 U.S. crude oil to continue to decline to about $55.25 a barrel.