An overnight downturn in crude oil prices and a 100-point sell-off on the Dow Jones Industrial Average put heavy pressure on energy stocks early Tuesday, pulling down all three of the sector's main indexes.
In early action, the Amex Oil Index ($XOI :1,171.04, -13.32, -1.1% ) was off 1.1% at 1,171.8 points, the Amex Natural Gas Index ($XNG462.45, -2.79, -0.6% ) was off 0.8% at 461.5, and the Philadelphia Oil Service Index ($OSX :200.67, -2.70, -1.3% ) retreated 1.4% to 200.6 points, all wiping out the previous session's gains.
Behind the move was a raft of bearish news, including a steep sell-off in China, concerns over heightened tensions in the Middle East, and weak durable goods orders in the United States. See Market Snapshot.
The sentiment was reinforced by a drop in oil prices, with the April crude oil contract on the New York Mercantile Exchange down 70 cents to $60.69 a barrel. The contract fell as low as $60.06 overnight. See Futures Movers.
In the oil index, independent refiner Hess Corp. (HES :54.64, -0.94, -1.7% ) was leading percentage decliners, down 2%, while shares of giants Exxon Mobil Corp. (XOM : 75.16, -0.24, -0.3% ) and Chevron Corp. (CVX : 70.92, -0.49, -0.7% ) were down 0.7% and 1%, respectively. Royal Dutch Shell (RDSA : 67.44, +0.27, +0.4% ) was the only index component to show a gain, its shares up 0.3% at $67.34 after a strong session in Europe.
While most oil service stocks were mired in red, shares of Rowan Cos. Inc. (RDC :31.74, +0.49, +1.6% ) were proving the exception, up 1.7%. The Houston-based drilling contractor reported a 29% jump in fourth-quarter earnings and announced plans to diversify its operations away from the U.S. Gulf.
Halliburton Co. (HAL : 31.97, +0.15, +0.5% ) was also among the oil service index's few gainers, up 0.2% at $31.89 a share. The company said late Monday it plans to complete its KBR Inc. spin-off by offering its shareholders 135.6 million shares of KBR at an exchange ratio to be determined by a "specific formula."
If the offer is completed but under-subscribed, Halliburton said it will distribute the remaining shares through a special dividend.
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