Wall Street lower as weak oil prices pull down energy stocks

By Sruthi Shankar

(Reuters) - U.S. stocks grappled with losses on Wednesday as a drop in oil prices for the fourth straight day pulled down energy stocks amid worries over delay in corporate tax cut.

The U.S. government reported an unexpected rise in crude oil and gasoline stocks, pushing further down oil prices that have been reeling under gloomy global demand outlook. [O/R]

Exxon fell about 1 percent, Schlumberger 1.9 percent and Halliburton 2.7 percent, dragging down the S&P energy index <.SPINY>.

Metal prices also slid as data from China stoked fears of a slowdown in the world's top commodities consumer.

"The market often goes through a bit of a 'what's next' in terms of a catalyst. Some of it's just natural pullback from what has been an extraordinary year," said Dave Donabedian, chief investment officer of CIBC Atlantic Trust Private Wealth Management.

 

"In recent days, the stock market is taking cues from the bond market, particularly the junk bond market and the constantly changing odds of tax reform passing is also weighing."

The U.S. Treasury yield curve flattened to a 10-year low after data showed a slight pickup in U.S. inflation, as the market priced in further interest rate hikes from the Federal Reserve next year. [US/]

At 12:30 p.m. ET (1630 GMT), the Dow Jones Industrial Average <.DJI> was down 94.85 points, or 0.41 percent, at 23,314.62, the S&P 500 <.SPX> was down 9.29 points, or 0.36 percent, at 2,569.58 and the Nasdaq Composite <.IXIC> was down 23.56 points, or 0.35 percent, at 6,714.32.

All three indexes were on track to post their biggest intra-day percentage losses since Nov. 9.

The CBOE Volatility index <.VIX>, a widely followed measure of market anxiety, hit a more than 2-month high at 14.51.

Among the few gainers were financial stocks <.SPY>, which rose on prospects of further rate hikes.

Target shares tumbled 9.32 percent after the retailer issued a disappointing profit forecast for the key holiday quarter.

Amazon's move to offer more discounts and steeper price cuts at Whole Foods sent shares of rival grocers Kroger and Costco down about 1 percent and Kellogg 2.13 percent.

Declining issues outnumbered advancers on the NYSE by 1,761 to 1,073. On the Nasdaq, 1,630 issues fell and 1,215 advanced.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Arun Koyyur and Anil D'Silva)