US stocks fell more than 1 percent on Tuesday, with energy stocks hit by lower oil prices and financials dropping on diminished prospects of a near-term rate hike.
The selloff was broad, with all 10 major S&P 500 sectors in the red and every Dow component, besides Apple, also declining.
The energy index’s 2.3 percent fall led the decliners as oil prices dropped more than 2 percent after an International Energy Agency report added to concerns about global oversupply.
“Oil is acting as a barometer for the economy,” said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.
The S&P financial index was down 1.85 percent after three Federal Reserve officials, including Board Governor Lael Brainard, took a dovish stance on interest rates on Monday.
“There is a heightened level of uncertainty regarding hikes and investors aren’t confident about any comments coming from Fed officials,” Bakhos said, adding the uncertainty would continue till the Fed’s meeting on Sept. 20-21.
Futures traders cut the chances of rate hike at the meeting to just 15 percent from 21 percent, according to the CME Group’s FedWatch tool. Goldman Sachs also further cut its view on a September move just 25 percent from 40 percent.
At 11:02 a.m. ET (1502 GMT) the Dow Jones Industrial Average was down 212.2 points, or 1.16 percent, at 18,112.87.
The S&P 500 was down 29.04 points, or 1.35 percent, at 2,130 and the Nasdaq Composite was down 56.15 points, or 1.08 percent, at 5,155.73.
The recent surge to record highs have left stock with high valuations. The S&P is trading at 17.3 times its forward 12-month earnings, above the 10-year median of 14.7 times, according to StarMine data.
One bright spot in the market was Apple, which jumped 2.7 percent after two US carriers reported strong demand for the new iPhones. The stock was chiefly responsible for the tech sector falling the least, 0.65 percent, among the 10 major S&P sectors.
Freeport McMoRan tumbled 9.3 percent, the most on the S&P, on a deal to sell some Gulf of Mexico assets to Anadarko Petroleum, which dipped only 0.8 percent. Some analysts called the $2 billion deal value inexpensive.
Declining issues outnumbered advancing ones on the NYSE by 2,517 to 389. On the Nasdaq, 2,181 issues fell and 466 advanced.
The S&P 500 index showed no new 52-week highs and two new lows, while the Nasdaq recorded 14 new highs and 22 new lows.