JPM JP Morgan Chase and Co

By Ellie Ismailidou and Carla Mozee, MarketWatch

Bank stocks crumble and tech rally loses steam

U.S. stocks retreated into negative territory Tuesday afternoon, as oil prices tumbled again on a cut to the government's price forecast.

The S&P 500 was down 8 points, or 0.4%, at 1,845. The Dow Jones Industrial Average was down 68 points, or 0.4%, at 15,961. The Nasdaq Composite lost 21 points, or 0.5% to 4,261.

All three main benchmarks opened in negative territory, turned positive and later released their gains as oil prices skidded again, after dipping in and out of positive territory in the morning. The energy sector was the S&P's worst performer, down 3%, followed by telecommunications and financials. Energy giant Chevron Corp. (CVX) was leading the Dow industrials decliners.

Read:Bank stocks extend slide toward multiyear lows (http://www.marketwatch.com/story/bank-stocks-extend-slide-toward-multiyear-lows-2016-02-09)

An earlier rally in the tech sector, which helped lift the main indexes, particularly the tech-heavy Nasdaq, lost steam as the day wore on. The tech selloff over the past two sessions had battered the so-called FANG stocks: Facebook, Amazon, Netflix and Google parent Alphabet.

On Tuesday, the FANGs pushed higher in the morning but released gains in the afternoon. Facebook(FB) was down 0.1%, Amazon(AMZN) fell 1.3%, and Alphabet(GOOGL) (GOOGL) lost 0.2%. The lone outlier was Netflix(NFLX), which gained 3.7%.

Read:Why a few money-making tech stocks won't make up for the big losers (http://www.marketwatch.com/story/why-a-few-money-making-tech-stocks-wont-make-up-for-the-big-losers-2016-02-09)

"The fear is palpable," said Kent Engelke, chief economic strategist at Capitol Securities Management, pointing to the heightened volatility in the stock market. "You feel smart for three seconds and then you get humbled again."

Pressure on oil prices and continuing worries about a slowdown in global economic growth were behind a stock selloff that hit markets across the world earlier, analysts said. It began in Japan, where the Nikkei Stock Average closed more than 5% lower, its biggest decline since 2013, and the 10-year Japanese benchmark yield fell into negative territory for the first time ever.

Oil prices (http://www.marketwatch.com/story/oil-rises-as-downbeat-iea-report-fails-to-add-to-pessimism-2016-02-09) leaned higher earlier in the day, as they shrugged off a downbeat report from the International Energy Agency (http://www.marketwatch.com/story/iea-warns-oil-surplus-will-be-worse-than-expected-2016-02-09), but tumbled again in the afternoon following the report from the U.S. Energy Information Administration. Brent oil also fell.

Read:Oil industry woes grow as storage levels hit 'critical level' (http://www.marketwatch.com/story/oil-industry-woes-grow-as-storage-levels-hit-critical-level-2016-02-08)

Companies in the energy space with balance-sheet issues continue to get severely punished, said Tim Anderson, managing director at MND Partners. He cited Chesapeake Energy corp. (CHK), which slid 3.2% Tuesday on top of Monday's 33% plunge, and Williams Companies Inc. (WMB), which recovered 1.3% Tuesday after a 35% loss Monday.

If the "quality names" in the oil sector, namely "big multinationals positioned to survive any shakeout" can outperform the commodity "today, and maybe throughout the week it could be an early sign of a change in sentiment toward the sector," Anderson said.

Read:Will oil be so cheap that it won't pay to pump it out of the ground? (http://www.marketwatch.com/story/will-oil-be-so-cheap-that-it-wont-pay-to-pump-it-out-of-the-ground-2016-02-09)

Bank stocks got pounded both in the U.S. (XLF) and in Europe amid worries about the impact of record-low interest rates and deteriorating credit conditions on banks' balance sheets. Goldman Sachs Group Inc. (GS) and J.P. Morgan Chase & Co. (JPM) were among the Dow industrials leading decliners.

Yellen ahead: Tuesday's moves come ahead of the marquee event for U.S. markets this week: Fed Chairwoman Yellen's semiannual testimony before House and Senate committees on Wednesday and Thursday.

"The market is starting to price out any more rate hikes from the Fed in 2016, let alone at the March meeting. Anything from Janet Yellen that confirms or denies that thinking will see markets react as the feeling that the Fed acted too early in December continues to grow," said James Hughes, chief market analyst at GKFX, in a note.

Read:Five questions Janet Yellen must answer (http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)

(http://www.marketwatch.com/story/five-questions-janet-yellen-must-answer-2016-02-09)"This really could go either way, but building fears of a global slowdown do seem to have the potential to push back the next round of U.S. rate hikes. Anything that adds weight to this argument can only mean more good news for stocks," said Tony Cross, market analyst at Trustnet Direct, in a note.

Economic data: A report on U.S. job openings, known as JOLTS, jumped to 5.6 million in December (http://www.marketwatch.com/story/job-openings-jump-to-56-million-in-december-second-highest-on-record-2016-02-09), the second-highest on record. Yellen has said she pays close attention to the quit rate, a proxy of worker confidence, included in the report.

But inventories at U.S. wholesalers fell in December (http://www.marketwatch.com/story/wholesale-inventories-fall-for-third-month-in-row-2016-02-09)for the third straight month, another sign companies cut back on restocking toward the end of 2015 amid softer sales.

Earnings: Goodyear Tire and Rubber Co. (GT) rallied 5% despite the company's report of a fourth-quarter loss (http://www.marketwatch.com/story/goodyear-posts-loss-as-it-books-charges-2016-02-09) as a write-down of the company's Venezuela operations, currency fluctuations and a one-time tax benefit the previous year masked financial results that beat analyst estimates.

Sears Holdings Corp. (SHLD) plunged 6.6% after the company warned its fourth-quarter revenue would fall short (http://www.marketwatch.com/story/sears-warns-on-sales-to-speed-up-store-closures-2016-02-09) of expectations, prompting the retailer to accelerate store closures and make deeper cost cuts.

Coca-Cola Co. (KO) reported fourth-quarter revenue (http://www.marketwatch.com/story/coca-cola-revenue-beats-but-profit-falls-short-2016-02-09) of $10 billion, above expectations of $9.9 billion, but per-share earnings of 28 cents were below Wall Street's forecast of 37 cents. Coke was up 0.5%.

Drugstore chain operator CVS Health Corp. (CVS) reversed losses to trade 1.4% higher after the company posted fourth-quarter sales and profit that met expectations (http://www.marketwatch.com/story/cvs-growth-boosted-by-acquisitions-pharma-2016-02-09).

Wendy's Co.'s (WEN) preliminary fourth-quarter adjusted profit (http://www.marketwatch.com/story/wendys-profit-revenue-beats-expectations-2016-02-09) of 12 cents a share beat expectations and the company anticipates same-store sales growth above what analysts were projecting. Wendy's shares lost 4.3%.

After the bell, Tesla Motors Inc. (TSLA) is forecast to report adjusted fourth-quarter earnings of 16 cents a share. Read:Tesla earnings: Model 3 spending, Model X sales in focus (http://www.marketwatch.com/story/tesla-earnings-model-3-spending-model-x-sales-in-focus-2016-02-05)

Other markets:Bank shares fell (http://www.marketwatch.com/story/european-stocks-get-clobbered-again-as-banks-slump-2016-02-09) in Europe amid a broad drop in European stock markets. Investors seeking safety pushed the yen to its highest level against the U.S. dollar since November 2014 (http://www.marketwatch.com/story/panicked-investors-flock-to-the-yen-shredding-the-dollar-2016-02-09)

Treasury yields fell sharply in early Asia trade but recovered by the U.S. day, leaving yields little changed (http://www.marketwatch.com/story/japans-10-year-bond-yield-turns-negative-2016-02-09). Gold prices turned down, trading below $1,200 an ounce.

(END) Dow Jones Newswires

February 09, 2016 13:10 ET (18:10 GMT)

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