Stocks sink, weighed down by another drop in price of oil

Exxon Mobil Corp. reported its lowest profit since 2002 on Tuesday and curtailed its stock buyback program.

Another steep drop in the price of oil weighed on global markets Tuesday, as investors fretted about the global economy following disappointing Chinese and U.S. manufacturing data earlier this week.

Energy stocks fell as oil giants Exxon Mobil and Chevron reported their worst quarterly results in more than a decade.

The Dow Jones industrial average slid 295.64, or 1.8 percent, to close at 16,153.54. The S&P 500 index fell 36.35, or 1.9 percent, 1,903.03. The Nasdaq tumbled 103.42 points, or 2.2 percent, to 4,516.95.

It’s a busy week on the economic data front, particularly in the U.S., where the week ends with monthly payroll figures.

So far, the numbers haven’t impressed. On Monday, the Institute for Supply Management said its gauge of factory activity pointed to a contraction while China’s official survey found that manufacturing fell to its lowest level in more than three years.

Those reports have weighed heavily on the stock market, and have put investors back in a selling mood after a brief reprieve last week. U.S. government bond prices rose as investors sought safety.

“The fear trade is alive and well and experiencing a resurgence. It’s all about focusing on defensive plays right now,” said Kristina Hooper, head of U.S. investment strategies for Allianz Global Investors.

The weak manufacturing reports weighed heavily on oil prices, and the selling pressure continued on Tuesday. Benchmark U.S. oil slumped $1.74, or 5.5 percent, to close at $29.88 a barrel on the New York Mercantile Exchange, a day after it plunged nearly 6 percent. Brent crude lost $1.52, or 4.4 percent, to $32.72 a barrel in London.

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Energy companies, as has been the case for several weeks, followed oil prices lower.

“Hope is extinguished for now, as the now two-day fall in crude has regained the market’s focus,” wrote John Briggs, head of Americas fixed income strategy at RBS, in a note to investors.

Chevron and Exxon, once the world’s two largest publicly traded companies, are showing signs of stress because of the plunge in oil prices. Exxon reported its lowest profit since 2002 and also announced it was curtailing its stock buyback program. Chevron posted its first quarterly loss since 2002.

Bank stocks fell on worries that oil prices will cause more energy loans to go bad, and that the slowing economy might impact their bottom line. There’s also concern that the slowing economy might put the brakes on the Federal Reserve’s plans to raise interest rates, which ultimately help banks make more money by raising borrowing rates on loans.

“This is a market that’s not going anywhere fast. Weak China, weak oil is still with us and will be with us for a while. The market needs time to work through this, and until then, we will see more volatility, particularly because of China,” said Anatasia Amoroso, a global market strategist at JPMorgan Asset Management.