U.S. Stocks Dragged Down by Plunge in Oil Prices

U.S. stocks settled lower on Tuesday, dragged down by another plunge in oil prices. The weakness in the oil sector had the biggest drag on the benchmark S&P 500 Index, which closed at 2437.03, down 16.43 or -0.67%. This was followed by the Dow Jones Industrial Average, which settled at 21467.14, down 61.85 or -0.29%. The technology-based NASDAQ Composite ended the day at 6190.63, down 48.38 or -0.78%.

In other news, investors were also responding to remarks from House Speaker Paul Ryan. He said the government is cutting back on regulatory red tape and that changes to the tax code must be permanent. On CNBC’s “Power Lunch”, Ryan said the U.S. can’t hit 3 percent growth without tax reform.

“I do believe you cannot even get close to 3 percent if you don’t get this kind of fundamental fiscal policy put to place. So I think tax reform’s absolutely essential for getting faster economic growth that’s durable, long-lasting,” the Wisconsin Republican told CNBC’s “Power Lunch” on Tuesday.

The Trump administration believe that slashing corporate and individual tax rates will lift the U.S. to sustained 3 percent GDP growth. This will be a tough goal to achieve given that the U.S. economy grew only 1.6 percent in 2016.

Additionally, both Ryan and Vice President Mike Pence said earlier Tuesday that the GOP aims to pass tax reform by the end of the year.

MSCI said Tuesday it plans to add 222 China A Large Cap stocks to its benchmark emerging markets index on a gradual basis beginning next year. A MSCI executive said that roughly $17 billion or more could now flow in Chinese stocks.

Crude Oil

Crude oil prices fell more than 2 percent on Tuesday, closing at a nine-month low. Traders were spooked by signs of rising production in key areas of the world. U.S. West Texas Intermediate crude oil is now down 20 percent from its 52-week closing and intraday highs, putting the commodity in bear market territory.

Prices fell on Tuesday in reaction to signs of rising output from Nigeria and Libya. Libya’s oil production rose more than 50,000 barrels per day to 885,000 bpd. Exports of Nigeria’s benchmark Bonny Light crude oil are set to rise by 62,000 barrels per day.

Economic News

There were no major reports on Tuesday, but Dallas Federal Reserve Bank President Robert Kaplan expressed doubts that short-term interest rates are very accommodative and said he wants to wait for more data to understand whether recent weak inflation readings are transitory as he suspects.