The recent rebound in oil appears to have been short-lived. That's too bad for energy stocks which saw even more losses on Monday in what has already been a devastating year.
Overall, benchmark indexes inched upward but it was a poor start after three straight weeks of market gains. The S&P 500 rose 0.04%, the Dow Jones Industrial Average was up 0.09%, and the Nasdaq added 0.37%.
Crude prices suffered from fears on both the demand and supply side to kick off the week, which pushed the commodity down to close at its lowest levels since the beginning of the month.
China flamed fears over weaker demand for oil after the latest numbers on its growth backed up recent evidence the world's second-largest economy is seeing a slowdown. Third-quarter GDP fell to 6.9% growth, its worst reading since the global financial crisis in 2009.
"The mainland's economic slowdown has triggered an avalanche of negative commentary, with
some analysts now warning of a China-led global recession in 2016," said Joseph Quinlan, chief market strategist at U.S. Trust, Bank of America Private Wealth Management.
"Since adjusting its currency in early August, sparking market fears that Beijing was angling for a weaker currency to prop up its faltering economy, China's economic prospects -- once considered the gold standard -- are now suspect in the eyes of many investors," he added. "Investors have been rocked by the unthinkable-- that China's economy is not immune to the laws of economic gravity, or the simple fact that what goes up, most come down.
On the supply side, Iran exacerbated concerns over global supply ahead of the removal of sanctions. Iran will be able to increase oil exports by 500,000 barrels a day next week. The country will likely be able to produce 3.4 million barrels per day within six months of sanctions being lifted.
The energy sector was the worst performer on markets as West Texas Intermediate crude closed 2.9% lower at $45.89 a barrel, its lowest level since October 2. Oil companies sold off in response. Among the major oilers, Exxon Mobil (XOM - Get Report) , Chevron (CVX - Get Report) , PetroChina (PTR - Get Report) , Royal Dutch Shell (RDS.A - Get Report) and ConocoPhillips (COP - Get Report) were all lower, while the Energy Select Sector SPDR ETF (XLE - Get Report) slid 2%.
Meanwhile, earnings season marched on. Morgan Stanley (MS - Get Report) shares fell more than 5% on a drop in quarterly profit. The bank joined Goldman Sachs (GS - Get Report) and JPMorgan (JPM - Get Report) in blaming a drop in bond-trading revenue as reason for declining income. Morgan Stanley reported net income of 48 cents a share, down from 83 cents a year earlier. Excluding one-time gains, profit fell to 34 cents a share and missed estimates of 63 cents.
Hasbro (HAS - Get Report) shares fell after a mixed quarter. The toymaker earned $1.58 a share, 6 cents above estimates, while revenue of $1.47 billion came in flat from a year earlier. Excluding currency exchange, sales rose 6%, driven by a 24% increase in its boys segment.
Halliburton (HAL - Get Report) shares were slightly lower after the oil company reported a mixed quarter. Like other oil companies in recent quarters, Halliburton reported better-than-expected profit, while its top-line took a big hit on declining commodity prices. Revenue slid 36% to $5.58 billion.
In other news, General Electric (GE - Get Report) moved higher after it began its offer to exchange shares of GE for Synchrony Financial (SYF - Get Report) stock at a 7% discount. Synchrony will become a stand-alone savings and loan company following the exchange offer. Investors and analysts alike have had their confidence renewed in GE as the company offloads its financial businesses to focus on manufacturing. Shares have jumped more than 16% since the beginning of the month.
Deutsche Bank (DB - Get Report) added more than 2% after announcing a major restructuring. The bank plans to split its investment bank into two units: one which will focus on corporate and investment banking, and the other on sales and trading. Several executives will be leaving as part of the restructuring including Colin Fan, co-head of investment banking.
Weight Watchers (WTW) rocketed more than 100% higher after Oprah Winfrey took a 10% stake in the company. Winfrey will also join its board. Weight Watchers has struggled in recent years as memberships decline.