By Anora Mahmudova and Victor Reklaitis, MarketWatch
Oil slump hit energy shares
U.S. stocks were trading modestly higher Tuesday, but under pressure from crude-oil prices, which were flirting with fresh multiyear lows.
The selloff in oil was weighing on energy and materials companies.
The S&P 500 was trading 4 points, or 0.2%, higher at 1,928 with half its 10 main sectors trading higher, led by a 0.9% gain in tech stocks.
The Dow Jones Industrial Average relinquished triple-digit gains to trade down 30 points, or 0.2%, higher at 16,426. Meanwhile, the Nasdaq Composite was showing modest gains, up 13 points, or 0.3%, at 4,651.
"Today's action is a classic definition of a dead-cat bounce, which began late afternoon on Monday and saw a follow-through this morning. But when markets rally for no reason, people take advantage and lighten their positions," said Michael Antonelli, equity sales trader at R.W. Baird & Co.
The U.S. oil benchmark (http://www.marketwatch.com/story/crude-sinks-to-30-a-barrel-a-level-not-seen-in-12-years-2016-01-12), which was trading higher in the morning, fell more than 3%, briefly dipping below $30 a barrel. The energy sector sold off, falling 1.4%.
See also:10 oil companies that will thrive as crude prices rebound (http://www.marketwatch.com/story/10-oil-companies-that-will-thrive-as-crude-prices-rebound-2016-01-12)
Antonelli said that markets are likely to retest August lows below 1,900 as there is still a lot of selling pressure.
"We believe the big takeaway for U.S. investors at the start of 2016 is that China is one of many issues that will likely create more volatility," said Kristina Hooper, U.S. investment strategist for Allianz Global Investors, in a note. But "that is only part of the story," as good U.S. economic reports suggest "investors with longer time horizons could find attractive opportunities amid the disarray," she added.
Other markets: China's Shanghai Composite closed higher on Tuesday (http://www.marketwatch.com/story/china-stocks-gain-asian-markets-breathe-sigh-of-relief-2016-01-11), but it is still down nearly 15% for the year amid worries over how Beijing is managing market turmoil and an economic slowdown in the world's second-largest economy.
European stocks traded higher (http://www.marketwatch.com/story/european-stocks-rebound-after-four-day-losing-streak-2016-01-12). Beyond Shanghai, Asian markets mostly closed lower (http://www.marketwatch.com/story/china-stocks-gain-asian-markets-breathe-sigh-of-relief-2016-01-11). Gold futures dipped, while a key dollar index edged up.
Individual movers: Alcoa Inc. (>> Alcoa Inc) shares plunged 8.4% after the company on Monday reported adjusted quarterly profit that topped Wall Street's forecasts, but revenue missed expectations (http://www.marketwatch.com/story/alcoa-reports-18-drop-in-revenue-2016-01-11-17485259).
Energy and materials companies were among the top decliners on the S&P 500. Williams Companies (>> Williams Companies Inc) fell 16% while Southwestern Energy Company (>> Southwestern Energy Company) fell 13%. Freeport-McMoRan Inc (>> Freeport-McMoRan Inc) was down 11%.
Shares of health insurers and health-care companies saw big gains.
Shares of Anthem Inc. (>> Anthem Inc) jumped 5% after the company said it enrolled more members than it had expected last year.
Also late Monday, Lululemon Athletica Inc. (>> Lululemon Athletica inc.) raised its fourth-quarter guidance (http://www.marketwatch.com/story/lululemon-hikes-outlook-on-strong-holiday-sales-2016-01-11), citing strong sales for the holiday season. Shares jumped 8.9% on Tuesday.
Economic news:Labor's Job Openings and Labor Turnover Survey (http://www.marketwatch.com/story/job-openings-rise-to-543-million-in-november-2016-01-12-1010385)showed 5.43 million job openings, up from 5.34 million in October. That's still shy of the all-time high notched earlier in the year, but moving in the right direction.