Stocks turned lower by mid-afternoon Tuesday as crude oil struggled to hold above $28 a barrel.
The S&P 500 was down 0.51%, the Dow Jones Industrial Average slid 0.34%, and the Nasdaq fell 0.93%.
Crude oil prices fell after the International Energy Agency warned commodities could fall even further this year as the market faces "enormous strain." In its first monthly report of the year, the energy watchdog said new supplies from countries such as Iran will leave the oil market with a surplus of 1.5 million barrels a day over the first half of the year.
The Iranian government ordered oil companies to ramp up production on Monday after sanctions were lifted over the weekend. Iran could add 500,000 barrels a day to its output, a significant increase from its current production of around 2.9 million barrels a day.
West Texas Intermediate crude oil was down 3.4% to $28.41 a barrel, hovering at 12-year lows. Oil prices have tumbled 23% so far this year.
Stocks closed out last week at their lowest levels since August amid a renewed selloff in crude oil prices, fresh fears over China and a smattering of poor economic data out from the U.S. The S&P 500 has dropped more than 7% since the beginning of the year.
Global markets closed sharply higher after Chinese economic growth fell as expected. Economic data from the world's second-largest economy frequently has disappointed economists, triggering fears over the intensity of the region's slowdown.
China's economic growth fell to 6.8% in the fourth quarter as trade and consumer spending weakened. The pace was its slowest in six years and pulled 2015 growth down to 6.9%, its weakest level in a quarter-century. However, the measure was as economists had expected and backed up hopes of further stimulus from Chinese officials.
"China is currently going through a transition phase and therefore many economic reports are going to reflect this by showing weak data," said Nigel Green, CEO of financial consultancy the deVere Group. "However, on the ground there is little evidence to suggest that the economy is in freefall. Indeed, consumer-spending power is strong and the indicators of this remain robust."
The International Monetary Fund said the global recovery would occur even more slowly than originally expected this year as China GDP continues to slow and oil prices hurt emerging economies. The organization expected a global growth rate of 3.4% in 2016, down 200 basis points from its previous guidance.
Tiffany (TIF) fell 6.1% after the jeweler announced job cuts and a reduced forecast for the year. The retailer said challenging global economic conditions had pressured consumer spending, while a stronger U.S. dollar continued to reduce overseas sales.
AIG (AIG) shares were slightly lower after activist investor Carl Icahn reinforced his case for a breakup. Icahn wrote in a letter to shareholders that AIG must become a "smaller, simpler company" to compete efficiently as a non-systemically important financial institution. Icahn had previously said the company was "too big to succeed."
Morgan Stanley (MS) shares fell slightly after the bank reported a much better fourth quarter than expected. The company earned an adjusted 43 cents a share, a dime above estimates, while revenue jumped to $7.7 billion, above estimates of $7.6 billion.
Bank of America (BAC) also reported a better-than-expected fourth quarter, driven by a 0.7% increase in sales and trading revenue. However, overall sales of $19.8 billion fell short of estimates of $20 billion. Shares fell 2.3%.
Jim Cramer's Action Alerts PLUS owns Bank of America in its portfolio.
"We are impressed by the quarter as the results reflect broad-based strength (consumer banking, wealth management and trading all exceeded expectations), continued expense savings (above analyst estimates), market share gains and enhanced visibility into 2015 earnings as the fourth quarter marks the last quarter that the bank must calculate risk-weighted assets under the Fed's stringent measures," said Cramer and Jack Mohr, research director of Action Alerts PLUS.
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Delta Air Lines (DAL) rose 2.7% despite missing quarterly estimates on its top- and bottom-lines. The airline generated revenue of $9.5 billion, below estimates, as passenger unit revenue fell 2.5%. Adjusted earnings of $1.18 a share missed by a penny.
UnitedHealth (UNH) climbed 2.5% after a better-than-expected fourth quarter. The health insurer earned $1.40 a share, 2 cents above estimates, on sales of $43.6 billion. However, overall profit was weaker than a year earlier as the company faced major losses on insurance policies sold through Affordable Care Act exchanges.