Wall St Slides Over 1%, Led by Financials, Energy Stocks

Economic IndicatorsReuters

U.S. stocks fell more than 1 percent on Tuesday, with energy stocks hit by lower oil prices and financials dropping on diminished prospects of a near-term rate hike.

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The sell off was broad, with all 10 major S&P 500 sectors in the red and every Dow component, besides Apple, also declining.

The energy index's 2.6 percent slide led the decliners as oil prices tumbled more than 2.5 percent after both the IEA and OPEC said the global crude glut would persist.

"Oil is acting as a barometer for the economy," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

The S&P financial index and KBW bank index both were down more than 2 percent, with the bank index set to notch its steepest drop in more than two months.

Three Federal Reserve officials, including Board Governor and voting member Lael Brainard, on Monday took a dovish stance on interest rates, in contrast to more hawkish comments from other officials in the past two weeks.

"There is a heightened level of uncertainty regarding hikes and investors aren't confident about any comments coming from Fed officials," Bakhos said, adding the uncertainty would continue until the Fed's meeting on Sept. 20-21.

Futures traders cut the chances of rate hike at the meeting to just 15 percent from 21 percent, according to the CME Group's FedWatch tool. Goldman Sachs cuts its view to 25 percent from 40 percent.

At 12:37 p.m. ET (1637 GMT) the Dow Jones Industrial Average was down 248.46 points, or 1.36 percent, at 18,076.61.

The S&P 500 was down 33.18 points, or 1.54 percent, at 2,125.86 and the Nasdaq Composite was down 70.46 points, or 1.35 percent, at 5,141.43.

The CBOE Volatility index, known as Wall Street's "fear gauge" jumped nearly 20 percent to 18.10.

One bright spot in the market was Apple, which jumped 2.6 percent after two carriers reported strong demand for the new iPhones.

The stock's gains were chiefly responsible for the tech sector falling the least, 0.82 percent, among the 10 major S&P sectors.

Freeport McMoRan tumbled 8.8 percent, the most on the S&P, on a deal to sell some Gulf of Mexico assets to Anadarko Petroleum, which dipped only 0.2 percent. Some analysts called the $2 billion deal value inexpensive.

Declining issues outnumbered advancing ones on the NYSE by 2,710 to 274. On the Nasdaq, 2,335 issues fell and 417 advanced.

The S&P 500 index showed no new 52-week highs and three new lows, while the Nasdaq recorded 22 new highs and 37 new lows. (Reporting by Tanya Agrawal; Editing by Savio D'Souza)

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