Decline in oil prices sends stocks down

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 lateafternoon 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.

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 dropped 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 close at 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.

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

Stocks appeared headed for a rebound early Tuesday after a steep market sell-off a day earlier. Traders drew encouragement from a published report out of China saying that country’s top economic adviser might visit Washington ahead of a planned meeting between Chinese President Xi Jinping and President Donald Trump at this month’s Group of 20 gathering in Argentina. The U.S. and China have raised tariffs on billions of dollars of each other’s goods in a dispute over U.S. complaints about Beijing’s technology policy. The long-festering trade dispute and the added costs it has begun to cause companies have stoked investors’ worries about the future growth of corporate profits.

“There is some good optimism that there is progress on trade at the G-20 meeting later this month,” said Craig Birk, chief investment officer at Personal Capital.

That optimism didn’t hold in the face of the steep tumble in oil prices, however.

“We had overnight strength and strength this morning that then invited more selling,” Baird’s Delwiche said. “And it’s all in the context with what’s going on with oil, which is making people perhaps more jittery than they would have been otherwise.”

Losses in health care companies and consumer goods stocks outweighed gains in banks and industrials Tuesday.