Weak oil hits US stocks; bank shares also drop

Traders work on the floor of the New York Stock Exchange, Feb 23, 2016.
Traders work on the floor of the New York Stock Exchange, Feb 23, 2016.PHOTO: REUTERS

NEW YORK (AFP) - US stocks tumbled on Tuesday, with energy-related equities dropping on lower oil prices and large banks falling on worries over bad energy loans.

The Dow Jones Industrial Average fell 188.88 points (1.14 per cent) to 16,431.78.

The broad-based S&P 500 fell 24.23 (1.25 per cent) to 1,921.27, while the tech-rich Nasdaq Composite Index dropped 67.02 (1.47 per cent) to 4,503.58.

Oil prices slumped more than 4 per cent after Saudi Arabia's oil minister Ali Al-Naimi ruled out any production cuts to address a price rout. Dow member Chevron and ConocoPhillips both lost nearly 4.5 per cent.

Dow member JPMorgan Chase slumped 4.2 per cent after it disclosed it plans to set aside an additional US$600 million (S$840 million) to cover potential loan defaults in the energy and mining sector, and could reserve another US$1.5 billion if conditions worsen.

Bank of America lost 3 per cent and Citigroup 3.3 per cent.

Dow member United Technologies fell 0.8 per cent following its statement that it halted merger talks with Honeywell due to "insurmountable regulatory obstacles and strong customer opposition" that would make a combination impossible. Honeywell fell 0.9 per cent.

Dow member Home Depot climbed 1.4 per cent after reporting that fourth-quarter earnings rose 6.7 per cent to US$1.5 billion and that it will boost its dividend by 17 per cent. Home Depot also projected 2016 comparable store sales growth of 3.7 to 4.5 per cent.

Macy's rose 3 per cent after reporting fourth-quarter earnings of US$2.26 per share, much above the US$1.89 expected by analysts. Colder weather in January boosted sales in northern climate zones.

Fitbit dived 20.8 per cent on a forecast of US$420-440 million in first-quarter revenues, below the US$485 million expected by analysts. The outlook highlighted worries that the wearables company's prospects could be threatened by competition from Apple and others.

Cabot Oil and Gas sank 10.6 per cent as a civil trial began in the state of Pennsylvania over allegations that fracking from Cabot wells contaminated drinking water.