Stocks moved off of lows by mid-afternoon Tuesday, though crude remained a drag despite lowered output forecasts from a top energy watchdog.
The S&P 500 was down 0.4%, recovering from losses of more than 1% earlier in the day. The Dow Jones Industrial Average fell 0.06%, and the Nasdaq slid 0.36%.
Crude oil held at lows despite lower U.S. oil production forecasts from the Energy Information Administration. The agency expects U.S. crude output of 8.67 million barrels a day this year, down from a previous estimate of 8.69 million. The guidance should come as some relief to commodity traders concerned over a supply glut.
Prices were already lower on Tuesday after analysts at Goldman Sachs warned the current push higher is unsustainable.
"Energy needs lower prices to maintain financial stress to finish the rebalancing process," the analysts wrote in a note. "Otherwise, an oil price rally will prove self-defeating, as it did last spring."
Worries over negotiations between major oil producers also hit oil markets after Kuwait said it would not submit to an output freeze unless all countries, including reluctant Iran, were in agreement. The Kuwaiti oil minister said he intended to sell every barrel produced until an agreement was made.
Oil closed at its highest level since January on Monday on signs of less supply in domestic markets. West Texas Intermediate crude oil was down 3.3% at $36.64 a barrel on Tuesday.
The energy sector was one of the worst performers on Wall Street on Tuesday. Major oilers such as Exxon Mobil (XOM - Get Report) , ConocoPhillips (COP - Get Report) and Schlumberger (SLB - Get Report) were lower, while the Energy Select Sector SPDR ETF (XLE - Get Report) slid 3.1%.
China showed further signs of weakening demand after trade data came in well below estimates. The world's second-largest economy on Tuesday reported a 25.4% drop in exports in February on weaker global demand and a week-long business shutdown during the Lunar New Year holiday. Exports were down more than double a month earlier.
Wall Street closed out Monday mixed with the S&P 500 and Dow extending their gains into a fifth session, but only by a hair. The Dow rose thanks to a rally in the energy and basic materials sectors, and the S&P 500 gained just 0.09%. The Nasdaq snapped its streak, pulling 0.19% lower due to pressure from high-momentum tech names.
Shake Shack (SHAK - Get Report) fell 11% following a softer-than-expected outlook for same-store sales growth this year. The burger chain expects same-store sales to grow between 2.5% and 3% this year, below estimates of 3.1% growth. The company did manage to beat fourth-quarter estimates with same-store sales surging 11%, above forecasts of 7.3%.
Urban Outfitters (URBN - Get Report) climbed 16% after showing improved margins during its holiday quarter. The apparel retailer earned 61 cents a share in its holiday quarter, a penny higher than a year earlier. Comparable-sales declined 2% over the quarter, slightly more than a 1.9% decline.
Dick's Sporting Goods (DKS - Get Report) recovered from earlier losses despite falling short of profit forecasts in its recent quarter. The sports goods retailer earned $1.13 a share, 3 cents higher than a year earlier, but below forecasts of $1.15. Sales climbed 3.7%, coming in above estimates.
SunEdison (SUNE) rocketed 25% higher after Vivint (VSLR - Get Report) terminated its merger agreement. The solar company said its financial position prevented it from meeting the terms of its deal. The deal was worth $1.9 billion when announced in July 2015.
Chevron (CVX - Get Report) shares were slightly higher after the oil company slashed its capital expenditure budget for 2017-2018 to $17 billion to $22 billion. The company had previously set a range of $20 billion to $24 billion. However, Chevron was able to maintain forecasts for production growth through the end of the decade.
JetBlue (JBLU - Get Report) fell 5% after issuing disappointing guidance for its first quarter. The airline said its preliminary review of unit revenue in February slid 10%, which would likely drag overall first-quarter unit revenue into decline. JetBlue said capacity additions and worse February weather were mainly to blame.
United Continental (UAL - Get Report) was down 2.4% after two major shareholders said they would nominate retired airline executive Gordon Bethune to lead new directors in a management shakeup. Hedge funds and shareholders Altimeter Capital Management and PAR Capital Management plan to push for six new board members.
Separately, United announced plans to buy 25 new 737-700 aircraft from Boeing (BA - Get Report) . The airline already has an order for 40 Boeing 737 aircraft. United plans to retire its current 747 fleet of aircraft by the end of 2018.