Stocks fall along with oil prices
The steepest drop in oil prices in more than three years put investors in a selling mood Tuesday, extending the Standard & Poor’s 500 index’s losing streak to a fourth day.
Energy stocks led a late-in-the-session sell-off on Wall Street after the price of U.S. crude oil plunged 7.1% 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 slipped 4 points, or 0.1%, to 2,722.18. The Dow Jones industrial average fell 100.69 points, or 0.4%, to 25,286.49, half of which was attributable to a drop in Boeing.
The Nasdaq composite was little changed at 7,200.88. The Russell 2000 index of smaller companies fell 3.99 points, or 0.3%, 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 United States 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.
Saudi Arabia said this week that the oil cartel and allied crude producers will probably need to cut supplies, perhaps by as much as 1 million barrels a day. But President Trump has been pressing Saudi Arabia and OPEC not to cut production.
Tuesday’s slide in oil prices weighed on energy sector stocks. Halliburton dropped 5.5% to $32.27.
Losses in healthcare companies and consumer goods stocks outweighed gains in banks and industrial firms.
Boeing fell 2.1% to $349.51 after news reports said the aircraft maker didn’t tell airline pilots about features of a new flight-control system in its 737 MAX that reportedly is a focus of the investigation into last month’s deadly crash in Indonesia.
Tyson Foods dropped 5.6% to $58.17 after the meat producer’s quarterly earnings beat analysts’ estimates but its revenue fell short. It also issued a weak outlook.
Advance Auto Parts rose 10.6% to $184.72 after the retailer reported strong quarterly results and raised its forecast.
General Electric jumped 7.8% to $8.61 after disclosing that it will sell a stake of up to 20% in Baker Hughes.
Bond prices rose. The yield on the 10-year Treasury note fell to 3.14% from 3.19% late Friday. Bond trading was closed Monday for Veterans Day.
Brent crude, used to price international oils, dropped 6.6% to $65.47 a barrel in London. Heating oil fell 4.3% to $2.06 a gallon. Wholesale gasoline slid 5.7% to $1.54 a gallon. Natural gas jumped 8.3% to $4.10 per 1,000 cubic feet.