By Dan Strumpf
A steep fall in crude prices and downbeat results from some of
the world's biggest oil producers sent stocks sliding Tuesday,
while investors bid up havens from government debt to
utilities.
The Dow Jones Industrial Average fell 295.64 points, or 1.8%, to
16153.54.
The declines came on the heels of a second straight day of lower
oil prices and a steep drop in quarterly profits from both Exxon
Mobil and BP, signs that even the sector's most resilient companies
are struggling in an environment of sharply lower oil prices.
Adding to the pain for the sector Tuesday was a wave of credit
downgrades by ratings agency Standard & Poor's, which said the
steep fall in oil prices could curtail energy companies' outlook
for years.
"It's a broad-based risk reduction," said Larry Weiss, head of
trading at Instinet, in describing Tuesday's moves. The yield on
the benchmark 10-year Treasury note fell to 1.864%, its lowest
level since April, from 1.966% Monday as investors sought
safety.
Utilities shares in the S&P 500 rose 0.4%--the only major
sector to post a gain Tuesday. High-dividend paying stocks like
utilities are often a draw for investors as bond yields fall.
The moves mark the latest slide for U.S. stocks this year, which
have been pummeled by diminishing expectations for global growth
and the deep slide in oil prices, which has hurt energy companies
but hasn't translated into a big uptick in consumer spending.
The S&P 500 is down 6.9% this year, while the Dow has lost
7.3%.
Exxon Mobil reported its lowest quarterly profit since 2002 and
said it would suspend its stock-buyback program, sending shares of
the Dow component falling $1.70, or 2.2%, to $74.59.
U.K. oil giant BP reported a sharp quarterly loss, sending
shares in the company down 8.7% in London.
Shares of Chevron fell 4.05, or 4.8%, to 81.24. Standard &
Poor's downgraded its corporate credit rating, along with the
ratings on 19 other oil and gas companies.
New York-traded crude oil fell 5.5% to $29.88 a barrel, taking
its two-day losses to 11%.
The S&P 500 fell 36.35 points, or 1.9%, to 1903.03, while
the Nasdaq Composite lost 103.42, or 2.2%, to 4516.95.
Despite a strong rally late last week "all of the same issues
that brought the [stock] market down in the beginning of the year
are still in play," said Bill Nichols, head of U.S. equities at
Cantor Fitzgerald.
Elsewhere, shares of cruise-line operators fell sharply after
Royal Caribbean Cruises issued 2016 and first-quarter guidance
below expectations. Investors bid up cruise-line stocks last year
on expectations that low energy prices would translate into more
robust vacation spending by consumers.
But Royal Caribbean said the stronger U.S. dollar and higher
expenses for its China expansion weighed on its results. Shares
fell 12.82, or 15%, to 71.70.
Yahoo shares fell 51 cents, or 1.7%, to 29.06. The company was
due to report fourth-quarter earnings after the close of trading
and planned to announce it is exploring strategic options, The Wall
Street Journal reported.
Alphabet on Monday afternoon reported a surge in profitability
at its main Google Internet businesses last year. Shares rose
10.14, or 1.3%, to 780.91, surpassing Apple Inc. to become the
largest company by market capitalization in the S&P 500.
Yahoo shares fell 51 cents, or 1.7%, to 29.06. The company
reported a quarterly loss of $4.4 billion after the close Tuesday,
and said it plans to eliminate roughly 15% of its workforce and
explore the sale of nonstrategic assets. Shares fell another 1.7%
in after-hours trading.
The Stoxx Europe 600 lost 2.1%, with losses concentrated in the
energy and banking sectors. UBS Group reported a fall in
fourth-quarter net profit. Shares fell 6.8% in Switzerland.
"People are nervous about global growth," said Stephen
Macklow-Smith, head of European equities strategy at J.P. Morgan
Asset Management, noting many of the emerging markets that have
struggled this year are also large producers of raw materials.
Stocks in Asia ended mostly lower. Japan's Nikkei Stock Average
closed down 0.6%, while the commodity-heavy S&P ASX 200 fell 1%
after the Reserve Bank of Australia held interest rates steady as
expected.
The Shanghai Composite Index, however, climbed 2.3% after
China's central bank injected more liquidity into the financial
system ahead of the weeklong Lunar New Year holiday.
Gold prices fell 0.1% to $1127.30 an ounce.
Aaron Kuriloff and Leslie Josephs contributed to this
article.
Write to Dan Strumpf at daniel.strumpf@wsj.com.
(END) Dow Jones Newswires
February 02, 2016 17:18 ET (22:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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