Stocks fell sharply Tuesday, with the Dow down almost 300 points, after another sell-off in the oil patch put energy shares on the defensive and risk-taking on hold in what has been a difficult start to 2016. Increasingly, the trading motto on Wall Street is: ‘As oil goes, so goes the U.S. stock market.’ And the correlation between the falling price of U.S.-produced crude and a stock market in the red is intact yet again Tuesday.
“Since the start of the year, there has been a 97% correlation between oil and equity prices,” Bruce Bittles, chief investment strategist at R.W. Baird, noted in a report. A barrel of West Texas Intermediate crude was down $1.74, or 5.5%, to $29.88 a barrel, and that pressured Dow components Exxon Mobil (XOM), which was 2.2% lower after topping a depressed earnings forecast, and Chevron (CVX), which was off 4.8%. FULL REPORT
