By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks drifted lower on Tuesday,
but plunging oil prices once again pounded shares of energy
companies.
The price of oil dropped to levels not seen in three years after
Saudi Arabia cut oil prices for the U.S., in a move meant to remain
competitive amid booming oil production in the U.S.
Meanwhile, the European Commission cut its forecast for growth
domestic product for the 18-country eurozone region to 0.8% this
year, from a previous forecast of 1.2%, in the spring. The
assessment comes ahead of Thursday's European Central Bank
meeting.
The S&P 500 (SPX) fell, as the big drop in the energy sector
accounted for nearly half of the decline in the index. The Energy
Select Sector SPDR Fund (XLE) fell 2.4%.
The Dow Jones Industrial Average (DJI) dipped in and out of
negative territory, with half of its components trading lower. The
Nasdaq Composite was also lower (RIXF)
Weak oil, weak Europe: Oil prices, already falling, didn't react
well to the EU growth assessment. The U.S. oil benchmark continued
to slide Tuesday, dropping more than to 2% (and as much as 3.5% at
points), and Brent crude also was under pressure after Saudi Arabia
deepened price cuts for the U.S. market. Strategists said the move
will pave the way for further falls in oil prices and pressure
American energy producers.
Analysts don't expect Wall Street to find much direction ahead
of Thursday's ECB meeting and Friday's nonfarm payroll data. "We do
expect the market to consolidate till then and the volatility could
pick up sharply during the event," said Naeem Aslam, chief market
analyst at AvaTrade, in emailed comments.
U.S. voters will head to the polls on Tuesday to decide closely
contested Senate races and control of that chambler. See: A
breakdown of how the market performs after midterm elections
In U.S. economic news, the nation's trade deficit jumped in
September to the highest level since the late spring. The
surprising spike in the trade deficit is likely to reduce
third-quarter growth when the government revises the report later
this month.
St. Louis Fed President James Bullard on Tuesday said that the
U.S. economy is on track to grow at a 3% annual rate over the next
14 months, which should allow the Federal Reserve to move ahead
with plans to hike short-term interest rates.
Alibaba, Herbalife among stocks to watch: Alibaba Group Holding
Ltd. (BABA) reported sales that beat forecasts, sending shares up
1.5%.
Shares of Herbalife Ltd. (HLF) fell 15% after the company
reported disappointing third-quarter results.
RetailMeNot Inc. (SALE) sank 26% after posting strong results,
but warning that much of its growth has been from "lower monetizing
mobile visits."
Sprint Corp. (S) slid 17% after results fell short of Wall
Street expectations.
Apple Inc. (AAPL) and Google Inc. (GOOG) reached a deal with
Walt Disney Co. (DIS) in which the two tech giants will allow
consumers who buy a Disney movie from either of their online stores
to watch it on smartphones, tablets and other digital devices that
run their rival's operating system.
Other markets: Europe stocks erased gains after news of the cut
in eurozone growth forecasts, while in Asia, the Nikkei 225 surged
2.7%. Gold prices (GCZ4) were moderately lower, while the
dollar(USDJPY) was taking a breather from rapid gains against the
yen.
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