Oil prices again drag Wall Street lower
NEW YORK — The ongoing slump in oil prices weighed on stocks again Tuesday, pushing energy companies to a repeat of big losses. Disappointing earnings outlooks from a range of companies, including Priceline and Michael Kors, also dragged down the market.
Oil has fallen sharply in recent weeks as global supplies rise while demand for fuel trails expectations. The latest decline was prompted by reports that Saudi Arabia is cutting the price of oil that it supplies to the United States as it attempts to maintain its market share as American production booms.
The drop in oil prices has hit energy stocks hard, driving them into negative territory for the year. It has helped push the stock market back from the record levels that it reached last week.
“It’s a case of sell first, ask questions later for anything oil related,” said Quincy Krosby, a market strategist at Prudential Financial.
The Standard & Poor’s 500 index fell 5.71 points, or 0.3 percent, to 2,012.10. The Nasdaq composite dropped 15.27 points, or 0.3 percent, to 4,623.64. The Dow Jones industrial average bucked the trend, edging up 17.60 points, or 0.1 percent, to 17,383.84.
While energy stocks are suffering, many analysts and investors predict that the nation’s economy will benefit in the long run from falling energy costs. Lower gas prices will put more money in consumers’ pockets, giving them more spending power.
Airlines were among the winners. Fuel is their single largest operating cost, and lower prices should mean higher profits if demand for air travel stays strong. Delta Airlines surged $1.71, or 4.2 percent, to $42.32. United Continental, Jet Blue and Southwest Airlines also logged big gains.
Investors kept an eye on third-quarter earnings reports as well.
Michael Kors fell the most in the S&P 500 index. The maker of luxury handbags, shoes and other accessories gave an outlook for the fourth quarter that disappointed investors. The stock fell $6.57, or 8.4 percent, to $71.42.
Priceline also slumped. The online travel booking company dropped $100.82, or 8.4 percent, to $1,097.70 after it hinted that the weak economic backdrop in Europe would hurt its earnings in the current quarter. Priceline reported that its earnings rose 28 percent in the third quarter, but its outlook for the current quarter fell short of analysts’ projections.
The news from overseas may have discouraged buyers.
The European Union cut its low economic growth forecasts further on Tuesday, indicating the recovery will remain sluggish amid problems for the biggest economies, particularly France and Germany. The official forecast for growth this year in the 18-country eurozone was cut to 0.8 percent from a prediction of 1.2 percent made in the spring. The institution cut its forecast for next year.