Oil slump weighs on US stocks; S&P 500 down 1.5 per cent

 Traders work on the floor of the New York Stock Exchange.
Traders work on the floor of the New York Stock Exchange. PHOTO: AFP

NEW YORK (AFP) - US stocks fell sharply on Thursday as the market turned its focus away from the Federal Reserve and back to a rout in oil prices that pummelled petroleum-linked equities.

Shares of Dow member Chevron fell 3.1 per cent, while oil-services giants Halliburton and Weatherford International fell 4.7 per cent and 5.7 per cent, respectively, as US oil prices ended below US$35 a barrel on worries about a persistent supply glut.

"It's all about oil today," said Peter Cardillo, chief market economist at Rockwell Global Capital.

The Dow Jones Industrial Average dropped 253.25 points (1.43 per cent) to 17,495.84.

The broad-based S&P 500 slid 31.18 (1.50 per cent) to 2,041.89, while the tech-rich Nasdaq Composite Index shed 68.58 (1.35 per cent) to 5,002.55.

Heading into Thursday, US stocks were riding a three-day winning streak that first anticipated then reacted to Wednesday's long-expected move by the Federal Reserve to raise US interest rates for the first time in nine years.

Thursday's pullback was not surprising in light of a Wall Street surge Wednesday that "was maybe a bit overdone," said Alan Skrainka, chief investment officer at Cornerstone Wealth Management.

Apple fell 2.1 per cent as RBC Capital Markets cut its estimates for iPhone sales in the March quarter, joining other investment banks that have highlighted the worry. RBC cut its target on Apple stock by US$10 to US$140, but maintained its "outperform" rating.

Separately, Apple named Jeff Williams as chief operating officer as part of a series of executive appointments.

Avon Products fell 1.5 per cent after announcing a partnership with investment firm Cerberus in which it will receive an infusion of US$605 million (S$858 million) in exchange for control of Avon North America.

Avon shares rose sharply in the morning, but later slipped into negative territory.

Barclays predicted in a note "cash burn" in 2016 as Avon reinvests, adding that short-term results "are likely to get worse before they (maybe) improve."

FedEx rose 2 per cent after reporting that earnings for the quarter ending Nov 30 rose 4.2 per cent to US$691 million.

The company said record holiday shipments are making up for continued weakness in industrial production and global trade.

Consultancy Accenture lost 5.3 per cent after reporting earnings for its first 2016 fiscal quarter of US$1.28 per share, four cents shy of analyst expectations.

Software giant Oracle fell 5.1 per cent as it reported that revenues for its fiscal second quarter fell 6 per cent to US$9 billion due to the strong dollar.