Wall Street opens lower as crude continues to distract

During the poor start for the year for U.S (Other OTC: UBGXF – news). stocks, their performance has been closely correlated with the price of oil, although some investors said Wall Street’s more modest decline on Monday meant the two assets could be decoupling somewhat.

A renewed rout in oil prices hit energy and materials shares, with the sectors losing 4.5% and 3.3% respectively.

United States stocks fell on Monday (Jan 25), with petroleum-linked shares especially weak, as oil prices resumed their downward slide.

The Dow Jones Industrial Average went up 210.83 points or 1.33 percent to settle at 16,093.51. The Nasdaq Composite Index shed 72.69 points, or 1.58 percent, to 4,518.49.

Exxon (XOM.N) and Chevron (CVX.N) were off about 1.5 percent, while Conocophillips (COP.N) was down 6.1 percent at $35.36 after Barclays said the oil and natural gas producer should cut its dividend by 75 percent.

At 8:28 a.m. ET (1328 GMT), Dow e-minis 1YMc1 were down 50 points, or 0.31 percent, with 38,976 contracts changing hands.

Profit taking contributed to the decrease by the price of oil along with continued oversupply concerns after Iraq announced record production in December.

Elsewhere the market is also gearing up for the Bank of Japan’s policy decision on Friday.

Tyco International PLC (TYC) leapt 11.6% after the security-systems company said it plans to combine with Johnson Controls Inc (http://www.marketwatch.com/story/johnson-controls-said-to-be-closing-in-on-tyco-international-takeover-2016-01-24).(JCI).

As it will take years to wash out the whole supply in oil market and reach the balance point where supply meets demand, many analysts do not expect oil prices would recovery soon.

Overall, the FTSE 100 index closed 0.4 per cent lower at 5,877.

In addition to the Fed meeting, investors are watching corporate earnings results for a read on the strength of the US economy as the reporting season picks up pace. Excluding energy companies, earnings are estimated to grow by 1.7 percent. The stock was the biggest drag on the Dow.

Twitter was down 4.3 percent at $17.07 after Chief Executive Jack Dorsey said four senior executives would leave the social media company.

Earnings news may attract some attention on Tuesday, as 3M (MMM), DuPont (DD), Johnson & Johnson (JNJ), and Sprint (S) are among the companies due to report their quarterly results before the start of trading.