Wall Street slides on oil prices

Specialist Michael Pistillo, left, works with traders at his post on the floor of the New York Stock Exchange. File photo / AP

Equities fell on both sides of the Atlantic along with the price of oil and a downgrade in the economic growth prospects for the euro zone.

Brent dropped to the lowest level in four years, while West Texas Intermediate crude slid to the lowest level in three years, after Saudi Arabia slashed prices for exports to US customers, while lifting prices for Asia and Europe.

"The Saudis have basically declared war on the US oil producers," Phil Flynn at Price Futures Group told Reuters. "I think they believe that the only way they're going to survive in the long term is to break the market in the short term."

In afternoon trading in New York, the Dow Jones Industrial Average edged 0.02 percent lower, the Standard & Poor's 500 Index fell 0.33 percent, while the Nasdaq Composite Index shed 0.51 percent.

The Dow fluctuated near Monday's record closing high. Declines in shares of Caterpillar and those of Walt Disney, down 1.8 percent and 1.6 percent respectively, offset gains in shares of Cisco and those of American Express, up 0.8 percent and 0.4 percent respectively.

The decline in oil "has an immediate effect on the energy sector, of course, but it also has implications for the broader market, reflecting a lack of demand,"John Kosar, director of research with Asbury Research in Chicago, told Reuters. "With the market at record highs, you'd like to see oil do better since demand for oil indicates the economy is humming along."

The latest earnings were a mixed bag. Shares of Priceline Group tumbled 9.3 percent after the company predicted fourth-quarter sales that failed to meeting expectations.
However, shares of China's e-commerce powerhouse Alibaba Group added 2.9 percent after the company reported profit that surpassed expectations. The company's shares recently were listed in New York.

"Mobile contribution to total transactions were higher than expected, which was a surprise," You Na, an analyst at ICBC International Research in Hong Kong, told Bloomberg News. "Revenue was also better than what people were expecting."

In Europe, the Stoxx 600 finished the session with a 1 percent slide from the previous close. The UK's FTSE 100 Index dropped 0.5 percent, Germany's DA declined 0.9 percent, while France's CAC 40 fell 1.5 percent.

Gross domestic product in the euro zone will grow 0.8 percent this year and 1.1 percent in 2015, the European Commission said, downgrading from its previous forecasts for 1.2 percent and 1.7 percent respectively.

The recovery is "not only subdued but also fragile," it said. "With confidence indicators declining since mid-year and now back to where they were at the end of 2013, and hard data pointing to very weak activity for the rest of the year, it is becoming harder to see the dent in the recovery as the result of temporary factors only."

Adding to intrigue about Europe's economic outlook, Reuters reports that several member nations of the European Central Bank plan to challenge the management style of President Mario Draghi.