Stock indexes sank Tuesday after yet another drop in the price of oil dragged down shares across the energy industry. Other areas of the market had modest losses as investors wait to hear from the Federal Reserve, which began a two-day policy meeting on interest rates.
The Standard & Poor's 500 index fell 8.02 points, or 0.3%, to 2,365.45. The Dow Jones industrial average fell 44.11, or 0.2%, to 20,837.37. The Nasdaq composite fell 18.97, or 0.3%, to 5,856.82. Two stocks fell on the New York Stock Exchange for every one that rose.
The price of oil has been slipping on concerns that supplies will outweigh demand. It has dropped from nearly $55 a barrel in late February to $47.72 on Tuesday, down 68 cents from the day before. Brent crude, which is used to price international oils, fell 43 cents to $50.92 a barrel in London. It was the seventh straight decline in the price of oil.
Energy stocks in the S&P 500 fell 1.1% on Tuesday, the largest loss among the 11 sectors that make up the index. Marathon Oil fell 3.3% to $15.32.
Lower oil prices help to curb inflation, and bond yields sank in tandem. The yield on the 10-year Treasury note fell to 2.59% from 2.63% late Monday. The 30-year yield sank to 3.18% from 3.21%, and the two-year yield slipped to 1.37% from 1.38%.
Stocks of smaller companies sank more than the rest of the market. The Russell 2000 of small-cap stocks lost 0.6%, double the decline of the S&P 500 index of the largest stocks.
When the Fed finishes its meeting Wednesday, most economists expect it will raise interest rates by a quarter of a percentage point. It would be the third increase since the Fed slashed rates to a record of nearly zero in 2008 during the financial crisis.
Investors probably are more interested to hear what Fed Chair Janet Yellen says about the pace of future increases. The job market, stock prices and other economic indicators have picked up momentum in recent months, which raises expectations for more increases.
In the past, expectations for higher rates may have spooked stock investors, because more expensive borrowing can slow the economy. That's not happening this time.
"We're in an environment now where the market is no longer afraid of Fed hikes because the perception now is the Fed is hiking for the right reasons," said Jon Adams, senior investment strategist at BMO Global Asset Management.
As long as the economy continues to improve and interest-rate hikes are only gradual, analysts say, stocks can maintain their lofty heights.
One key risk, Adams said, is that many of the encouraging data points from recent months have come from opinion surveys, such as confidence levels for consumers and purchasing managers. He'd like to see that optimism translate into more action by shoppers and businesses, whether that's by spending or producing more, before getting more confident.
Airline stocks had some of the market's biggest losses after the industry canceled thousands of flights in the face of fierce snowstorms. United Continental dropped 4.7% to $66.55, while rival Southwest Airlines slid 3% to $52.88 and American Airlines Group fell 2.7% to $41.21.
Valeant Pharmaceuticals sank 10.1% to $10.89 after one of its biggest investors sold its entire stake in the company. Valeant's stock has tumbled nearly 96% since its peak in the summer of 2015 because the company is facing more scrutiny for raising prices on its drugs. Activist investor Bill Ackman's Pershing Square said Monday that it has sold its investment in Valeant.
Healthcare stocks held relatively steady overall amid increased expectations that the Republican proposal to overhaul the Affordable Care Act, also known as Obamacare, is unlikely to pass in its current form. The sector fell 0.3%.
The nonpartisan Congressional Budget Office said late Monday that the Republican proposal would result in 24 million more uninsured people over a decade, while trimming the federal deficit by $337 billion.
Pandora Media slumped 6.4% to $11.59 after the streaming music company announced it will launch an on-demand service to compete with Apple Music and Spotify.
In the currency market, the British pound fell against the dollar after Parliament gave its prime minister the authority to divorce Britain from the European Union. Scotland's first minister, meanwhile, called for a referendum to break free of the United Kingdom.
The pound fell to $1.2145 from $1.2231 late Monday. The euro fell to $1.0632 from $1.0660, and the dollar slipped to 114.72 Japanese yen from 114.77 yen.
Gold fell 50 cents to $1,202.60 an ounce, silver fell 5 cents to $16.92 an ounce and copper rose 1 cent to $2.64 a pound. Wholesale gasoline was little changed at $1.58 a gallon, heating oil fell 1 cent to $1.49 a gallon and natural gas fell 11 cents to $2.94 per 1,000 cubic feet.
In Europe, Germany's DAX stock index was close to flat, while Britain's FTSE 100 slipped 0.1% and the French CAC 40 lost 0.4%. In Asia, Japan's Nikkei 225 stock index declined 0.1%, South Korea's Kospi rose 0.8% and the Hang Seng in Honk Kong was close to flat.
2:25 p.m.: This article was updated with closing prices, context and analyst comments.
8:20 a.m.: This article was updated with market prices and context.