Stocks tumble after big rally as oil falls sharply

February 24 04:45 2016

After its recent hot streak, the Dow Jones industrial average cooled off Tuesday as stocks tumbled amid a renewed slump in oil prices and a still uncertain outlook for global growth and U.S. corporate earnings. Its been pretty straight up since the Dow bottomed on Feb. 11. In the six trading days since, the blue chip stock gauge has rallied more than 960 points, or 6.1%, trimming its year-to-date loss from 10.1% at its low to 4.6% after Monday’s close.GTY 459378734 A FIN MAX USA NY

But today selling pressure has returned. In early afternoon trading, the Dow Jones industrial average was down 175 points, or 1.1%. The Standard & Poor’s 500 was off 1.1% and the Nasdaq composite was 1.2% lower. The early-year stock market funk has been overrided recently by an improvement in investor sentiment, a spate of solid economic growth in the U.S. and a  rebound in oil prices amid hopes for a production freeze by leading producers.

But hopes for a near-term oil production cut were dashed Tuesday when Saudi Arabia’s oil minister said a cut is not going to happen because many oil-producing nations likely would not do so even if they agreed to cutting production. Bloomberg also reported that Iran’s oil minister shot down calls for a production “freeze,” calling such a plan “ridiculous.” Those comments dashed hopes on Wall Street that the oil glut would end anytime soon, and pushed the price of a barrel of U.S. produced crude down 5%.

The U.S. stock market is still hounded by many of the same headwinds that hobbled it earlier in the year. China’s slowing economy is still a question mark, global growth is still under pressure and corporate earnings in the U.S. are undergoing a period of contraction.