Nasdaq hits lowest since late August on low oil prices

Wall Street sank on Friday morning, with the Nasdaq hitting its lowest since August 24th and the Dow plunging nearly 400 points, as oil prices dived below $30 per barrel.

The sell-off was broad, with all 10 major S&P sectors in the red and all 30 Dow components lower. The beaten-down energy sector’s 3.1 per cent slide led the declines.

Brent crude prices, which have fallen 20 per cent this year, were down nearly 5 per cent as the market braced for oil from Iran to flood an already oversupplied market.

World stocks were set for a third straight week of losses.

"Oil is deeply oversold. The stock market is deeply oversold. The inability for the market to rally from deeply oversold conditions clearly tells you how weak the market is," said Adam Sarhan, chief executive of Sarhan Capital in New York.

Oil prices flirting with 12 year lows and the Federal Reserve tightening policy is "a one-two punch that the stock market just can't handle," Sarhan said.

US stocks have been in a steep selloff since the start of the year amid concerns about a slowdown in China and global growth. But, a rebound in oil prices fueled a rally on Thursday.

The Dow Jones industrial average was down 358.99 points, or 2.19 per cent, at 16,020.06 in early trading in New York.

The S&P 500 was down 38.11 points, or 1.98 per cent, at 1,883.73.

The Nasdaq Composite index was down 133.36 points, or 2.89 per cent, at 4,481.64. It hit a low of 4,463.458, the lowest level since the market plunge on August 24th when China devalued the yuan.

Dow components Exxon and Chevron were down 3-4.5 per cent, while Caterpillar dropped nearly 4.5 per cent.

But the biggest drop was in Intel, tumbling 8.8 per cent to $29.87 as concerns about the chipmaker's slowing data centre revenue growth overshadowed a quarterly profit beat.

Apple was down 3 per cent and was the biggest drag on the S&P and the Nasdaq, while Goldman Sachs’ 3 percent fall weighed the most on the Dow.

Citigroup was down 5 per cent at $43.03, while Wells Fargo fell 3.8 per cent to $48.65, after reporting largely in-line quarterly earnings.

Investors are bracing for weak earnings reports with companies hit by plunging oil prices, concerns over China’s economy and a global economic slowdown.

Data on Friday showed an unexpected 0.1 per cent fall in US retail sales in December as unseasonably warm weather hurt sales of winter apparel.

US industrial output fell for the third straight month in December, underscoring a worsening outlook for fourth-quarter economic growth.

Fed policymakers have hinted at slowing the rate hike programme should the economy not show signs of stability.

New York Fed president William Dudley said on Friday that lower oil prices and a stronger dollar have raised the risk of US inflation expectations heading lower, hurting chances of actual inflation reaching the central bank's 2 per cent goal.

Declining issues outnumbered advancing ones on the NYSE by 1,756 to 166. On the Nasdaq, 2,204 issues fell and 194 advanced.

The S&P 500 index showed no new 52-week highs and 42 new lows, while the Nasdaq recorded two new highs and 208 new lows.