Investing.com -- U.S. stocks fell sharply on Tuesday erasing most of their gains from a two-day rally dating back to last week, as the prolonged downturn in oil prices continued to weigh.
In Tuesday's session, U.S. crude futures slid more than 5% to close below $30 a barrel for the first time in more than a week. The latest sell-off in global oil prices was triggered by reports that Iran could increase its exports to approximately 2.3 million barrels a day when it unveils its fiscal year budget in late-March. The added supply is expected to depress prices even further in a market already oversaturated by excessive supply. At Tuesday's close of $29.95, WTI crude is approaching last month's 12-year low near $27 a barrel.
The Dow Jones Industrial Average fell 295.64 or 1.80% to 16,153.54, while the NASDAQ Composite index lost 103.42 or 2.24% to 4,516.95, halting a three-day winning streak. Entering Tuesday, the Dow had surged by more than 350 in the previous two sessions combined. The S&P 500 Composite index, meanwhile, dipped 36.35 or 1.87% to 1,903.03, as all 10 sectors closed in the red. Stocks in the Energy, Financials and Consumer Services industries lagged, each falling by more than 2% on the session. With the sharp losses, the S&P 500 fell back into correction territory.
The oil rout has spilled over into the financial sector, as a host of prominent banks remain severely exposed to struggling firms in the oil industry. On Tuesday, Morgan Stanley (N:MS) plunged more than 4% to hit a 52-week low at 24.39 before closing at 24.50. In Europe, two other major banks, Banco Santander (MC:SAN) and Deutsche Bank (DE:DBKGn) AG NA O.N. (N:DB), each plummeted more than 5% to fall to their lowest levels since the Financial Crisis.
Also on Tuesday, Exxon Mobil Corporation (N:XOM) said its earnings for the fourth quarter of last year fell by 58% on an annual basis, marking the oil giant's smallest quarterly profit in more than a decade. At the same time, ExxonMobil (N:XOM) announced that it is cutting capital spending by approximately 25% this quarter and suspending its comprehensive share buyback program. Over the fourth quarter, the company repurchased 9.4 million shares for $754 million.
"While our financial results reflect the challenging environment, we remain focused on the business fundamentals, including project execution and effective cost management," ExxonMobil chairman and chief executive officer Rex Tillerson, said in a statement.
Separately, Standard & Poor's said late Tuesday that it is cutting the credit ratings of 20 oil companies, including Chevron Corporation (N:CVX), Marathon Oil Corporation (N:MRO) and Hess Corporation (N:HES). The aforementioned trio will have their ratings cut from AA to AA-, one step above junk territory, according to S&P. As a result, Chevron (N:CVX) shares fell 4.05 or 4.75% to 81.24.
Goldman Sachs Group Inc (N:GS), which closed just below Chevron, ended the session at 151.79, down 7.86 or 4.92% on the day. Goldman, alone, shaved off roughly 60 points from the Dow in the session. Goldman Sachs was the worst performer on the Dow. In total, all but one of the 30 Dow components closed in the red.
The top performer on the Dow was EI du Pont de Nemours and Company (N:DD), which added 2.88 or 5.40% to 56.18. Earlier, Dow Chemical Company (N:DOW) CEO Andrew Liveris announced on Tuesday his intentions to retire by mid-2017. The two chemical giants are expected to complete a massive $103 billion merger by the second half of this year.
The biggest gainer on the NASDAQ was Mattel Inc (O:MAT), which jumped 3.70 or 13.83% to 30.46. On Monday evening, the toymaker reported stellar earnings after its iconic Barbie brand finished with its first quarterly profits in nearly three years. The worst performer was Tesla Motors Inc (O:TSLA), which fell 14.16 or 7.19% to 182.78.
The top performer on the S&P 500 was Michael Kors Holdings Limited (N:KORS), which soared 9.42 or 23.29% to 49.86, after the luxury accessories company topped analysts' earnings and revenues forecasts with its quarterly results. The worst performer was ADT Corporation (N:ADT), which fell 4.78 or 16.17% to 24.79, after the home and business security specialist narrowly missed analysts' expectations with its quarterly revenues on Monday.
Alphabet Inc (O:GOOGL) overtook Apple Inc (O:AAPL) on Tuesday as the world's most valuable company after adding 12.65 or 1.68% to close at 764.65. A session earlier, Alphabet said its fourth quarter sales rose 18% on an annual basis, driven by strong advertising revenues on the period.
On the New York Stock Exchange, declining issues outnumbered advancing ones by a 2,447 to 616 margin.