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 7,200.87. 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 likely 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.
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 the price of 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% to $32.27.
Early in the day, stocks appeared to be headed for a rebound from Monday’s steep market sell-off. Traders drew encouragement from a report out of China saying that country's top economic advisor might visit Washington before a planned meeting between Chinese President Xi Jinping and President Trump at this month's Group of 20 gathering in Argentina.
The United States and China have raised tariffs on billions of dollars’ worth of each other's goods in a dispute over U.S. complaints about Beijing's technology policy. The 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,” 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 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 manufacturer 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. The company also issued a weak outlook, noting that it faced higher labor and freight costs.
Financial stocks gained ground the day after posting big losses. Unum Group rose 2.7% to $38.01.
Advance Auto Parts leaped 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. GE, which has been struggling with sagging profits, aims to raise about $4 billion in cash from the sale.
D.R. Horton rose 2.4% to $34.69 after the homebuilder agreed to buy Westport Homes, which builds homes in Indiana and Ohio.
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.
The dollar held steady at 113.86 yen. The euro strengthened to $1.1268 from $1.1240.
Gold fell 0.2% to $1,201.40 an ounce. Silver fell 0.2% to $13.98 an ounce. Copper rose 0.4% to $2.69 a pound.
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.