U.S. stocks drop as oil falls to $28 a barrel
NEW YORK — The Dow shed another 120 points on Tuesday, while the S&P 500 and Nasdaq each lost about 1%.
Stocks were led lower by oil prices, which fell to $28 a barrel on Tuesday afternoon after starting the day above $30.
The volatile market swings come during what’s been a terrible start to 2016 for U.S. stocks. Worries about cheap oil prices and global growth have sent the S&P 500 10% lower so far this year.
Global stocks remained under pressure overnight. Stocks in Japan plummeted 5%, while European markets closed down about 1%. That negative sentiment carried over into American stocks.
The Nasdaq is now down more 18% from its most all-time high set last July. If the index sinks below 4,185.55, it will be in what’s known as a bear market, signaling a 20% decline from previous highs.
In the last two trading days — Friday and Monday — the Dow has shed 390 points. The selloff partially reflects investors’ fears of falling oil prices.
Low oil prices are great for spenders at the gas pump, but they’re spreading fear about energy companies potentially going bankrupt. There’s also concern about the oil trouble spilling over into the financial sector, which has loaned lots of money to energy companies.
“There’s concern that it’s starting to spread to other parts of the economy,” Doug Cote, chief market strategist at Voya Financial. “I am concerned about European banks.”