US stocks fall as oil drops to lowest since November
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US stocks fell on Tuesday as oil prices dropped to their lowest since November and airlines pulled industrial stocks lower.
Health sector shares were volatile as traders digested a nonpartisan research report that showed 14 million Americans would lose medical insurance by next year under the Republican plan to dismantle the Obamacare healthcare reform.
Trading volumes were light ahead of a Federal Reserve statement due Wednesday in which the US central bank is expected to raise rates by 25 basis points.
Airline stocks slipped as a blizzard swept through the heavily populated northeastern United States, grounding thousands of flights. United Continental fell 4.7% to $66.55 while Southwest Airlines dropped 3.1% and American Airlines lost 2.8%.
Oil prices slid to three-month lows after OPEC reported a rise in global crude inventories and a surprise jump in production from its biggest member, Saudi Arabia, while it raised its forecast of production in 2017 from outside the group, suggesting complications in an effort to clear a glut and support prices.
The S&P energy sector was down 1.0% and was on track to close at its lowest since 4 November. Chevron was off 1.6% and was the biggest drag on the Dow and the S&P 500.
“None of the data you’re getting is good if you’re trying to increase (crude) prices, it doesn’t look like oil supply is diminishing,” said Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh.
She said energy sector earnings have little upside potential so their stocks’ underperformance is to be expected.
The Dow Jones Industrial Average fell 39.26 points, or 0.19%, to 20,842.22, the S&P 500 lost 8.28 points, or 0.35%, to 2,365.19 and the Nasdaq Composite dropped 19.43 points, or 0.33%, to 5,856.35.
Valeant plunged 12.3% to $10.63 after billionaire investor William Ackman said his hedge fund, Pershing Square Capital, sold its entire stake in the company.
Declining issues outnumbered advancing ones on the NYSE by a 2.05-to-1 ratio; on Nasdaq, a 1.97-to-1 ratio favoured decliners.
The S&P 500 posted 14 new 52-week highs and 4 new lows; the Nasdaq Composite recorded 54 new highs and 58 new lows. Reuters