Stocks were trading sharply lower in early trading Tuesday, with the Dow down more than 250 points after another selloff in the oil patch puts energy shares on the defensive and risk-taking on hold on in what has been a difficult start to 2016.
Increasingly, the trading motto on Wall Street is: ‘As oil goes, so goes the U.S. stock market.’ And the correlation between the falling price of U.S.-produced crude and a stock market in the red is intact yet again Tuesday. “Since the start of the year, there has been a 97% correlation
between oil and equity prices,” Bruce Bittles, chief investment strategist at R.W. Baird, noted in a report.
A barrel of West Texas Intermediate crude was down $1.57, or 5%, to $30.05 a barrel, and that pressured Dow components Exxon-Mobil, which was 3.1% lower after topping a depressed earnings forecast, and Chevron, which was off 3.3%.
The fall in oil prices has resumed as hopes for coordinated production cuts from leading oil producers fades.
The weakness in Exxon-Mobil and Chevron weighed on the 30-stock Dow, which was down 263 points, or 1.6%, at 16,186, one hour into the trading session. The broader Standard & Poor’s 500 index was 1.4% lower and the Nasdaq composite dropped 1.1%.
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