Stocks closed lower Tuesday, led by declines in energy stocks as the price of crude oil took a tumble.
The price of oil dropped 3 percent Tuesday after the International Energy Agency cut its forecast for global demand growth. The declines were broad. Apple was the only Dow stock to finish higher.
ON WALL STREET: At the close, the Dow Jones industrial average was down 258.3 points, about 1.4 percent, at 18,066.8.
The Standard & Poor’s 500 index declined 32 points, about 1.5 percent, to 2,127.
The Nasdaq composite dropped 56.6 points, about 1.1 percent, to 5,155.3.
OIL PRICES: As markets closed, oil prices took a pounding Tuesday after a leading industry group said global oil demand growth is slowing by more than previously thought, largely because of a more pronounced economic slowdown during the third quarter of the year.
In its September oil market report, the Paris-based International Energy Agency reduced its forecast for global demand growth to 1.3 million barrels a day in 2016 — 100,000 below the previous forecast. All in all, the alteration in the demand-supply balance anticipated by the IEA has weighed on oil prices.
U.S. benchmark crude fell $1.39 to $45.45 a barrel in trading on the New York Mercantile Exchange. In London the price of Brent crude, used to price international oils, was down 89 cents at $47.43 a barrel.
U.S. RATE FOCUS: The main point of interest in markets at the moment centers on the Fed and when it will raise interest rates again. Comments last Friday from Fed rate-setter Eric Rosengren had stoked expectations of a rate hike as soon as next week, prompting big losses in global stock markets. On Monday, his peer Lael Brainard failed to echo the more hawkish tone, helping Wall Street to recover strongly. She argued that the “new normal counsels prudence in the removal of policy accommodation.” Low rates over many years have boosted stock prices as investors put their money in assets given the low returns available in bonds.
ANALYST’S OPINION: Analyst Randy Frederick, vice president of trading and derivatives at Charles Schwab, said investors don’t know what the Federal Reserve is going to do with interest rates after a few days of contradictory comments from Fed officials. “Some of the things they said Friday scared people,” he said. “Monday they tried to calm them down. Now they’re in a quiet period so we don’t know what they’re thinking.” Before Friday, the market had been very calm for two month, Frederick said, adding that after such periods, stocks often have very strong reactions to news.